The Budget in Review: What the Property Tax Changes Actually Mean for You
These changes still need to pass the Senate. Final details may shift, talk to your accountant before restructuring anything.
The Federal Budget handed down on 12 May brought the biggest shake-up to property tax in over two decades. Add three rate rises already this year and there's a lot of noise to cut through.
The good news: if you're approaching property the right way, focused on real returns, not just tax offsets, the fundamentals are stronger than the headlines suggest. Here's what you actually need to know.
Negative Gearing on Established Residential Property
From 1 July 2027, if you purchased an established residential investment property after 7:30pm on 12 May 2026, you can no longer offset rental losses against your salary or other income.
Those losses don't disappear though. They carry forward and can be applied against future rental income from any residential property you own, or against your capital gain when you sell. The tax benefit is deferred, not eliminated. Treasury's own worked example confirms this: accumulated losses reduce the taxable gain at sale.
Already own? You're fully grandfathered for as long as you hold.
Capital Gains Tax
The 50% CGT discount is being replaced from 1 July 2027 with cost-base indexation. Your cost base is adjusted for inflation, and you only pay tax on the real gain above that. A 30% minimum tax rate applies to that real gain.
For long-held properties in a strong growth market, the difference between the two methods is more nuanced than the headlines imply. In some scenarios, indexation is actually more favourable. If you own investment property in SEQ, get the calculation done for your specific situation before assuming the worst.
What Hasn't Changed
A lot, actually.
- New builds: negative gearing fully intact, plus choice of 50% discount or indexation at sale
- Existing owners (pre-Budget night): grandfathered in full
- Owner-occupiers: main residence exemption unchanged
- Commercial property: entirely exempt from the negative gearing changes
- SMSFs: no change expected
A Reframe Worth Considering
The investors least affected by this change are the ones who were never relying on negative gearing as their primary return. Positive gearing, where your rental income covers or exceeds your costs, was always the stronger long-term position. The budget changes make that case even more clearly.
SEQ's rental vacancy rates (1.1% on the Gold Coast, below 0.5% in parts of the Sunshine Coast) and yields of 5%+ in key markets mean positive gearing is achievable right now in ways it simply wasn't five years ago.
The properties that stack up on fundamentals today aren't going to stop stacking up because the tax treatment shifted.
This article is general information only and does not constitute financial, legal or investment advice. Please seek independent professional advice before making any property decisions.