Following Tuesday night’s Federal Budget announcement, we’ve received many questions from clients and partners regarding the proposed taxation changes impacting property investors.
While the headlines have created concern across the market, it’s important to remember that none of these measures are law yet. They must still pass through the Senate, where amendments and negotiation are likely over the coming months.
At API, our role is to help clients navigate changing markets and policy environments with clarity, strategy and long-term thinking. Not emotion, panic, or fear-based decision-making.
The government’s stated intention is to stimulate the construction of new housing while reducing investor competition for established homes, helping improve opportunities for first-home buyers entering the market.
Here are the currently proposed changes affecting investors:
- Capital Gains Tax (CGT)
From 1 July 2027, the current 50 CGT discount would be replaced with CPI-based indexation. In simple terms, investors would pay tax on the “real gain” after inflation rather than receiving a flat 50 discount.
Based on current commentary from accounting and advisory groups, including William Buck and Accountancy in the Hills, eligible new residential properties are expected to retain favourable treatment, with investors potentially able to choose between the existing 50 CGT discount or cost-base indexation under the proposed framework. - Negative Gearing
For established residential investment properties purchased after last Tuesday evening’s announcement, rental losses would no longer be offset against personal income from 1 July 2027. Instead, losses would be carried forward and applied against future rental income or capital gains from investment property. Importantly, existing property owners (including buyers already under contract prior to the announcement) are grandfathered under the current rules and can continue accessing negative gearing as they do today.Eligible “new builds” being residential properties that genuinely add to housing supply, such as dwellings constructed on vacant land, off-the-plan properties or developments replacing existing homes with a greater number of dwellings like duplexes, are expected to remain exempt, with investors continuing to access both negative gearing benefits and favourable CGT treatment under the proposed changes.
- Trust Taxation
A proposed 30 minimum tax on discretionary trust income from 1 July 2028 may impact some investment structures and should be reviewed with your accountant or adviser.
What hasn’t changed:
- Owner-occupied homes remain fully exempt from CGT
- New residential construction continues to receive favourable tax treatment
- Commercial property remains unaffected
- SMSFs and superannuation structures remain unchanged
What this really means for investors is that strategy, structure, and asset selection become even more important moving forward.
These reforms will also create significantly more complexity for investors, introducing a dual system where taxation outcomes differ depending on the property type and purchase date. Investors will now need to carefully track acquisition dates, maintain more detailed records, carry forward quarantined losses where applicable, and ensure any “new build” investment genuinely qualifies under the government’s supply criteria.
This is precisely why quality advice and due diligence matter.
At API, we have always focused on strategic investment opportunities aligned with long-term fundamentals, particularly quality new-build property in high-demand growth corridors that contribute genuine housing supply. The proposed reforms further reinforce the importance of this approach.
We also encourage investors to be cautious over the coming weeks and months.
Major policy announcements often create market noise and attract opportunistic commentary or “spruiker-style” marketing designed to create urgency or fear, often without genuine consideration for location quality, build standards, delivery capability, or long-term investment fundamentals.
If your family, friends or members of your network are considering investing in a new property, encourage them to do so strategically, with their eyes open and supported by experienced professionals with decades of proven expertise, not short-term marketers chasing headlines.
Our advice remains the same:
Focus on fundamentals.
Invest strategically.
Seek experienced guidance.
Think long term.
We’ll continue monitoring developments closely and will provide updates as more details become available.
If you would like to discuss how these proposed changes may impact your personal strategy or portfolio, our team is here to help.
Warm regards,
Director, Active Property Investing