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Last night's Federal Budget delivered some of the most significant proposed property tax reforms Australia has seen in decades.
For investors, developers and anyone building long-term wealth through property, the announcements around negative gearing and capital gains tax are likely to have major implications if legislated.
While many measures are still proposals at this stage, the direction is now much clearer. The Government is looking to reshape how property investment is taxed in Australia.
Here are the key property-related changes announced in the 2026-27 Federal Budget.
The headline announcement is the proposed reform to negative gearing rules from 1 July 2027.
Under the proposal:
Importantly, there is a grandfathering provision.
Established residential properties acquired before 7:30pm AEST on 12 May 2026 would remain under the current rules.
That means many current investors may not be directly affected, but future investment decisions could look very different.
The Government says the reforms are designed to improve housing affordability and increase investment into new housing supply. Critics argue it may reduce investor participation and place pressure on rental markets.
Either way, this is a major structural shift for Australian property investment.
The Budget also proposes substantial changes to capital gains tax from 1 July 2027.
Currently, eligible individuals and trusts can access a 50% CGT discount on assets held longer than 12 months.
Under the proposed reforms:
The changes are proposed to apply broadly across CGT assets held by individuals, trusts and partnerships.
For property investors, this could materially alter long-term after-tax returns and may influence holding periods, asset structures and exit strategies.
Interestingly, investors in eligible new residential builds may still be able to choose between the existing 50% discount and the new indexed approach.
The Government also announced an extension of the temporary ban on foreign purchases of established residential dwellings until 30 June 2029.
The stated goal is to improve housing availability for Australians while still encouraging investment into new housing supply.
While this may not directly affect most local investors, it could have flow-on effects in certain markets and development sectors.
At this stage, these are proposed measures and will still need to pass through Parliament.
However, the announcements alone are already shaping conversations around:
Property has long been a core wealth-building strategy for Australians. These reforms could change how investors approach that strategy moving forward.
This Budget signals a clear shift toward encouraging investment into new housing supply while reducing some of the tax advantages historically associated with established investment properties.
For some investors, the impacts may be limited due to grandfathering provisions. For others, especially those planning future acquisitions, the changes could materially affect investment strategy and returns.
Now is a good time to review your current structures, future plans and overall strategy before these proposed reforms potentially come into effect.
If you would like to discuss how these announcements may affect your position, the Attune Advisory team is here to help.
Call 1300 866 113 or visit attuneadvisory.com.au
