The 2026 Budget limits negative gearing to new residential builds and replaces the 50% CGT discount with inflation indexation plus a 30% minimum tax on capital gains; these changes largely apply from 1 July 2027 and will materially affect investor cash flow and after‑tax returns.
What changed (plain language)
- Negative gearing will be limited to newly built residential properties. Investors who buy established properties after Budget night will no longer be able to offset rental losses against other income; unused residential losses can be carried forward to offset future residential income.
- The 50% CGT discount will be replaced by cost‑base indexation (to remove inflation) and a 30% minimum tax on capital gains for individuals, trusts and partnerships; these CGT changes apply to gains accruing after 1 July 2027.
Comparison
| Feature | Current rule | New rule (from 1 July 2027 / Budget night) |
| Negative gearing | Losses deductible against other income | Limited to new builds; established properties bought after announcement cannot offset other income. |
| CGT | 50% discount for eligible taxpayers | Indexation of cost base + 30% minimum tax on gains accruing after 1 July 2027. |
Practical impact for investors
- Check ownership date: Properties held at Budget night are generally exempt from the negative‑gearing change. Confirm your acquisition timestamp.
- Recalculate cash flow and serviceability: losing the ability to offset rental losses against wages can increase net holding costs and affect loan servicing.
- Model after‑tax returns: compare the current 50% discount outcome with the indexation + 30% floor to see how real returns change.
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