The 2026–27 Federal Budget, delivered on Tuesday 12 May by Treasurer Jim Chalmers, focuses on making the tax system fairer for young Australians with an overhaul of the rules for negative gearing and capital gains tax.
“This Budget is designed to make building a brand-new home more attractive for investors, rather than purchasing existing property in order to retain tax incentives with negative gearing and CGT benefits,” explains MyChoice Home Loans General Manager, John Berghella.
“Put simply, by removing some of the investor tax benefits on established property, the Government hopes to support first home buyers entering the market who cannot afford to build a new home and level the playing field, and direct investor tax incentives towards building new property to further support New Housing supply targets.”
In summary:
Here’s everything we know about the proposed tax changes and how it may impact you, depending on your circumstances.
Note: These changes are proposed and will need to pass Senate. The final details may shift during the legislative process.
I already own an investment property (before 12 May).
- Capital Gains Tax (CGT): A split system will be applied when the time comes to selling your property. Any capital growth prior to 1 July 2027 will remain eligible for the existing 50 per cent CGT discount. Gains accrued from 1 July 2027 onwards will be calculated using the proposed cost-base indexation method, with a 30 per cent minimum on all new gains.
- Negative Gearing: Since your property is ‘grandfathered’, meaning those already negatively gearing established properties can continue to do so, without any changes. If you own the property, you can continue to claim rental losses against your salary and other sources of income.
I’m looking to invest in an established home (after 12 May).
- Capital Gains Tax (CGT): From 1 July 2027, the 50 per cent discount will be replaced a cost-base indexation method, and a 30 per cent minimum tax will apply to all net capital gains.
- Negative Gearing: You will still be able to claim any rental losses against all your income up until 30 June 2027. From 1 July 2027, you will no longer be able to deduct rental losses against any form of income with losses only to be used against residential income property.
I want to invest in a new build (after 12 May).
- Capital Gains Tax (CGT): The choice is yours. You can use either the existing 50 per cent CGT discount or the new cost-base indexation method with the minimum 30 per cent tax.
John continues, “investing in a brand-new home build could be a financially sound and savvy option for investors, giving them the option to select whichever offers a better tax outcome.”
As land and construction loan specialists, building a brand-new home is simple with the right loan backed by expert advice and ongoing support. Chat to our team today to discuss your construction loan.
- Negative Gearing: Like those who already own an investment property, there will be no changes with investors having the ability to fully deduct rental losses against their salary and other income.
I’m a first home buyer planning to live in my home (after 12 May).
- Capital Gains Tax (CGT): The main residence exemption is unchanged. Owner-occupiers will not pay any capital gains tax when selling the property.
- Negative Gearing: This is not applicable to owner-occupier properties.
- Deposit Help: The expanded 5 per cent Deposit Scheme continues to be available, helping first home buyers purchase a home with a smaller deposit and no Lenders Mortgage Insurance (LMI) fees. Learn more here.
What to consider from here.
At this point, these are just proposed changes and will need to pass the Senate. Whilst this year’s Budget highlights the Government’s stated direction, the final details may shift during the legislative process.
This budget has been designed to benefit first home buyers and those looking to invest in newly built properties, with the proposed changes to apply to capital gains tax and negative gearing.
For anyone considering a property purchase or investment, the decision to choose between new or established housing is now a more meaningful factor in the financial equation. Make the sensible step forward and speak to MyChoice Home Loans about investing in your future today.
Disclaimer: This article is intended as general information only and does not constitute financial, tax or legal advice. Please seek independent professional advice before making any financial decisions.
