What the Budget means for you and your property
Treasurer Jim Chalmers' 2026 Budget rewrites the rules on capital gains tax, negative gearing and family trusts. Here is what every Australian property owner, investor, tenant and first home buyer needs to understand.
On Tuesday 13 May 2026, Treasurer Jim Chalmers broke Labor's election promises on tax, introducing reforms described by the government as promoting 'intergenerational equity' and by critics as the most significant overhaul of property and investment taxation since 1999.
The 50% CGT discount is abolished
From 1 July 2027, the 50 per cent CGT discount that applied to assets held for more than 12 months is replaced by CPI-based indexation. Capital gains will be taxed closer to an investor's marginal income tax rate – up to 47 per cent. A 30 per cent minimum tax on net capital gains also applies. These changes cover property, shares, businesses and most other asset classes.
Existing properties locked out
Negative gearing will only apply to newly built properties for purchases made after budget night. Approximately 230,000 Australians currently use negative gearing on existing investment properties. Analysis shows the change hits hardest in outer suburban 'tradie zones' – not high-wealth postcodes.
30% minimum tax from July 2028
Testamentary discretionary trusts – widely used by families to manage inheritance, education funds and disability planning – will face a 30 per cent minimum tax from 1 July 2028. Estate planning lawyers have described the measure as 'a death duty by any other name'. Around 100,000 investors are affected.
Superannuation remains the standout shelter
The government left superannuation rules largely intact. SMSFs retain a 33 per cent CGT discount on assets held for more than one year inside super, producing an effective CGT rate of just 10 per cent. SMSF lending was not touched. Deceased estates and fixed trusts are exempt from the trust changes.
Property advisers are warning more than two million investment property owners of a looming and largely unknown compliance requirement.
Select your situation below to see what the budget changes mean and what steps to consider.
The intent of both the negative gearing and CGT changes is to reduce investor competition for existing homes, potentially easing price pressure in the suburbs where first home buyers are most active.
Fewer investors in the market means fewer rental properties. Tighter rental supply is likely to push rents higher, making it harder to save a deposit while renting. The net impact on purchase prices is genuinely uncertain.
Young investors who used 'rentvesting' – buying an investment property while renting where they want to live – as a path to building wealth will find the higher CGT rate makes this strategy significantly less attractive.
Negative gearing remains available for newly built properties. This may direct more investor activity into new construction, potentially increasing housing supply over time.
- ✓Speak with a qualified mortgage broker and financial adviser about your deposit strategy in the new tax environment
- ✓Ask your First National agent about new build opportunities in your target suburb – these may attract increased investor interest and new supply
- ✓Monitor rental market conditions carefully – reduced investor activity could tighten supply and push rents higher before purchase prices soften
- ✓Review any government first home buyer grants and schemes, which remain unchanged in this budget
The 50 per cent CGT discount continues to apply to gains accrued on your existing investment properties up to 30 June 2027. From 1 July 2027, a CPI indexation model applies to gains accruing from that date forward. When you eventually sell, two separate calculations apply to the one property – one for gains before the cut-off and one for gains after it. You do not lose the benefit already accrued. But without a registered valuation in place at 1 July 2027, the ATO will apply a default formula to establish the base value for the new calculation – and that formula is almost certain to understate your property's true market value, artificially inflating your future taxable gain.
If you purchased an existing investment property before budget night, you may continue to negatively gear it under the existing rules. Any new purchases of existing properties will not be eligible. Going forward, only newly built properties qualify for negative gearing.
Commission a registered property valuation before 1 July 2027. It costs as little as $500. Without it, the ATO default understates your property's market value – one buyer's agent has modelled this could cost a Sydney investor $40,000 more in tax on a single property. Across a portfolio, the difference runs into six figures. There are only around 5,800 certified practising valuers in Australia. Book early.
Assets held within superannuation retain a 33 per cent CGT discount after one year, producing an effective CGT rate of just 10 per cent. SMSF lending was not touched. Super has become the most tax-efficient vehicle for property investment in the new environment.
- ✓Commission a registered property valuation on every investment property before 1 July 2027 – this is the single most important action you can take right now
- ✓Have your accountant model your after-tax returns under the new two-calculation CGT regime before deciding whether to hold or sell
- ✓If considering further investment, speak with your adviser about new builds, which remain eligible for negative gearing and offer investors a choice of CGT calculation method
- ✓Review whether your SMSF could play a greater role in future property investment given its substantially improved relative tax position
- ✓If you hold assets in a testamentary discretionary trust, consult an estate planning lawyer before July 2028
- ✓Consider whether New Zealand property investment merits exploration – see the New Zealand tab for detail
The principal place of residence CGT exemption is unchanged. If you sell the home you live in, you will not pay capital gains tax. The budget changes do not affect owner-occupiers in this respect.
Any investment property, shares or business assets you hold outside super will be subject to the new CGT regime from 1 July 2027. The 50 per cent discount that effectively halved your tax bill on those assets no longer applies to gains accrued from that date.
If you have a testamentary discretionary trust as part of your will – used to protect assets for children, grandchildren or family members with a disability – you face a 30 per cent minimum tax from July 2028. Estate lawyers describe this as a death duty in all but name.
Reduced investor activity in the existing property market may place downward pressure on prices in some suburbs over the medium term. This is relevant if you are planning to upgrade, downsize or relocate.
- ✓Review your will and any testamentary discretionary trust arrangements with an estate planning lawyer as a priority
- ✓If you own investment assets outside super, ask your accountant to model the impact of the new CGT rules on your position
- ✓If you are planning to upgrade or downsize, speak with your First National agent about timing – market conditions may shift as investor activity adjusts
- ✓Review your superannuation strategy – super has become significantly more attractive as an investment vehicle relative to direct property or shares
The removal of negative gearing from existing properties reduces the financial incentive for individuals to purchase and lease residential properties. If investors exit the market or decline to expand their portfolios, rental supply could tighten – placing upward pressure on rents.
Negative gearing remains available for new builds. If investor demand shifts meaningfully towards new construction, this could increase supply over the medium to long term – though the timeline is uncertain and construction costs remain elevated.
When New Zealand removed negative gearing in 2021, rents rose significantly. The NZ government reversed the policy in 2023 partly in response. Australia's rental market is already under considerable pressure. This historical precedent is worth bearing in mind.
If the policy achieves its intended effect of reducing investor competition for existing properties, there may be a modest improvement in purchase affordability in some markets over time. Whether this offsets rising rental costs in the interim is the critical question.
- ✓Monitor your local rental market closely – the impact on rents may vary significantly by suburb and city
- ✓If you are saving to buy, speak with a mortgage broker about your timeline – market conditions may shift as investors adjust their behaviour
- ✓Contact your First National agent for a frank assessment of rental and purchase market conditions in your area
Retirees holding investment properties, shares or other assets outside superannuation will face a higher CGT rate on gains accrued from 1 July 2027. The 50 per cent discount is replaced by indexation from that date, with gains taxed closer to your marginal income tax rate. A 30 per cent minimum tax on net capital gains also applies. Gains accrued before 1 July 2027 retain the 50 per cent discount treatment.
Testamentary discretionary trusts – commonly used to protect assets for children, grandchildren or a family member with a disability – will face a 30 per cent minimum tax from 1 July 2028. If your estate plan relies on such a trust, it requires urgent review.
Assets held within superannuation are in a significantly stronger position relative to direct investment than before the budget. The existing 10 per cent effective CGT rate inside super – unchanged by this budget – is now a compelling advantage. SMSF lending was also preserved.
The period before 1 July 2027 remains under the current CGT regime. Decisions about timing a sale warrant careful advice given the significant tax differential between the old and new systems. Acting before the cut-off date may crystallise gains under more favourable conditions.
- ✓Obtain a registered valuation on every investment property before 1 July 2027 to avoid the ATO default formula – which could cost tens of thousands of dollars more in tax
- ✓Review your will and testamentary trust arrangements with an estate planning lawyer before July 2028
- ✓Ask your financial adviser to model whether selling assets before July 2027 under the current regime makes more sense than holding under the new regime
- ✓Review your superannuation strategy – the relative tax advantage inside super has improved materially
- ✓Consider whether New Zealand offers an attractive retirement or investment destination – see the New Zealand tab for detail
Within 24 hours of the budget, New Zealand Finance Minister Nicola Willis issued an invitation to Australian investors and business owners: 'Where the bloody hell are you? Come over.' The quip landed because the contrast between the two countries' tax environments is now stark.
New Zealand's tax position for property investors – post Australia's 2026 Budget
No capital gains tax – no stamp duty – no land tax – negative gearing available – lower relative income tax rates – a buyers' property market – and an AUD/NZD exchange rate that works in your favour.
New Zealand's property market has swung firmly in favour of buyers. Stock levels remain elevated and sales volumes have fallen for three consecutive months. Values recovered a modest 0.3 per cent in the March 2026 quarter, but the weak economy and elevated mortgage rates mean further price gains are not guaranteed in the near term. For buyers with capital, the timing may be advantageous.
First National has a network in New Zealand
Our New Zealand offices can provide local market insight, connect you with trusted advisers and help you assess whether property ownership or investment across the Tasman suits your circumstances.
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