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2026-27 Budget · Proposed, not yet law · Updated 24 June 2026

Australia's 2026 property tax changes, explained

The 2026-27 Federal Budget proposed three big changes for property investors: negative gearing is quarantined for newly bought established rentals, the 50% CGT discount is replaced, and super over $3 million is taxed more. Most changes start 1 July 2027.

None of this is law yet - a Bill is before Parliament. Your current returns and your 50% CGT discount this year are completely unaffected. Here is what changes, when, and whether you keep today's rules.

Reviewed by the Vestly team
Updated June 2026Methodology

The key takeaway:if you owned a property at 7:30pm AEST on 12 May 2026, you keep today's negative-gearing and 50%-CGT-discount rules on it. Buy an established rental after that moment and the new rules apply from 1 July 2027. Everything here is proposed and could change.

The 2026 property tax changes at a glance

Four measures from the 2026-27 Budget matter most to property investors. Here is what each one does, when it is proposed to start, and who it affects. Remember - none of this is law yet.

Summary of the 2026-27 Budget property tax changes, their proposed start dates, and who is affected
ChangeStartsWho's affected
Negative gearing quarantined1 July 2027Established (not new) rentals acquired on or after 7:30pm 12 May 2026. Earlier purchases grandfathered.
50% CGT discount replaced1 July 2027Gains accruing after that date. Replaced by CPI indexation + a 30% minimum tax. Earlier gains keep current rules.
Super over $3m taxed more1 July 2026Balances above $3m - an extra 30% on realised earnings. LISTO also rises to $810.
Trust distributions minimum tax1 July 2028A 30% minimum tax on discretionary trust distributions.

Source: the 2026-27 Federal Budget tax-reform announcement and the ATO new-legislation detail page. All measures are proposed and not yet law.

The negative gearing change, in plain English

Today, if your rental property runs at a loss - rent minus interest, expenses and depreciation comes out negative - you can deduct that net loss against your salary and other income, reducing your overall tax bill. That is negative gearing.

Under the proposal, from 1 July 2027 net rental losses on established (existing, not new) residential dwellings acquired on or after 7:30pm AEST on 12 May 2026 are quarantined. A quarantined loss can only be deducted against your residential rental income or your residential capital gains - not against your salary, wages or other income. Any unused loss carries forward to future years and can offset future rental income or gains.

The grandfathering line

Properties held before 7:30pm AEST on 12 May 2026 are grandfathered. Today's negative-gearing rules continue to apply to them until you sell. So if you already owned your rental at that moment, nothing changes for it - you keep deducting net losses against your other income as you do now.

Two more points worth holding onto. First, new dwellings are unaffected - buy a brand-new property and the existing negative-gearing rules continue to apply as proposed. Second, this targets the moment of acquisition: it is the purchase date relative to 7:30pm on 12 May 2026 that decides whether an established rental falls under the old rules or the new ones.

This is a proposed measure from the 2026-27 Budget. It is not law, and the detail could change as the Bill moves through Parliament.

The CGT change: the 50% discount is replaced

Today, individuals who hold an asset for more than 12 months pay capital gains tax on only half the gain - the flat 50% CGT discount. Under the proposal, from 1 July 2027 that flat discount is replaced by two things working together:

  • Inflation (CPI) indexation of your cost base - so only the real, above-inflation part of your gain is taxed. The slice of the gain that just kept pace with inflation is effectively removed.
  • A minimum 30% tax applied to the gain.

Crucially, this applies to gains that accrue after 1 July 2027. Any gain that built up before that date keeps the current 50%-discount rules. In practice that means your future CGT could be split: the pre-1-July-2027 portion under today's rules, and the portion after under the new indexation-plus-minimum-tax approach.

A simple illustration (illustrative only)

Imagine an investor makes a $100,000 gain over a period where inflation accounted for $20,000 of it. Under the proposed approach, CPI indexation removes that $20,000 inflation slice, leaving an $80,000 real gain. A minimum 30% tax framing then applies to that real gain. The headline idea is that you are taxed on the genuine, above-inflation increase in value rather than a flat half of the whole number.

These numbers are illustrative only, chosen to show the mechanics. The exact CPI figure, how the minimum tax interacts with your marginal rate, and the split between pre- and post-1-July-2027 gains all depend on your circumstances. Confirm any real calculation with a registered tax agent.

This is a proposed measure from the 2026-27 Budget and is not yet law.

Super over $3 million, and trusts

Two more measures sit alongside the property changes. They are not property-specific, but they matter to investors who hold property inside a self-managed super fund (SMSF) or through a trust.

Super: from 1 July 2026, super balances over $3 million are proposed to be taxed an extra 30% on realised earnings. At the same time the Low Income Superannuation Tax Offset (LISTO) rises by $500 to $810, and its income threshold lifts from $37,000 to $45,000.

Trusts: from 1 July 2028, a 30% minimum tax is proposed on discretionary trust distributions. If you hold investment property through a discretionary (family) trust, this is the measure to keep an eye on.

Both measures are proposed in the 2026-27 Budget and are not yet law.

Are you affected?

For negative gearing, the dividing line is one moment in time: 7:30pm AEST on 12 May 2026. It comes down to whether you owned the property before then, or bought an established rental after.

Owned before 7:30pm 12 May 2026

Grandfathered - today's rules. You keep negative gearing against your other income and the 50% CGT discount on the gain built up to 1 July 2027. Nothing changes for a property you already held, until you sell it.

Bought an established rental after

New rules from 1 July 2027. Net rental losses are quarantined (deductible only against rental income or residential capital gains), and the CGT discount is replaced by CPI indexation plus a 30% minimum tax. New dwellings are an exception - they stay under the existing rules.

For CGT, the split is purely date-based: gains accruing before 1 July 2027 keep today's rules whatever your purchase date. These are proposed measures and could change.

What to do now

Nothing here demands a rushed decision - the main changes are over a year away and are not yet law. But a few sensible, general steps put you in a strong position whatever happens.

  • Know your purchase date. For negative gearing, whether you owned each property before or after 7:30pm on 12 May 2026 is the single fact that decides which rules apply. Have it on record for every property.
  • Keep clean records of your cost base. If the CGT change lands, your gain may be split into a pre- and post-1-July-2027 slice. Good records of what you paid, your capital improvements and your holding costs make that far easier to get right.
  • Track your cashflow and tax position year-round. Knowing your real rental loss, your deductions and your gain as you go - not just at tax time - means you can see the impact of any change on your own numbers rather than guessing.
  • Talk to your accountant before you act. Buying, selling or restructuring around a proposed (not yet law) change is exactly the kind of decision to run past a registered tax agent for your situation.

This is where Vestly helps. It keeps your purchase date, cost base, cashflow and live tax position on record for every property, all year round - so when the rules do change, you already have the numbers you need to see exactly how you are affected.

Common questions

Am I grandfathered under the 2026 property tax changes?

If you owned a residential rental property before 7:30pm AEST on 12 May 2026, you are grandfathered for negative gearing - today's rules continue to apply to that property until you sell it. The new negative-gearing rules only apply to established (not new) residential dwellings acquired on or after that moment. The CGT change is date-based instead: it applies to gains that accrue after 1 July 2027 regardless of when you bought, with gains before then keeping the current rules. This is a proposed measure, not yet law.

When do the property tax changes start?

The negative-gearing and CGT changes are proposed to start from 1 July 2027. The super change (an extra 30% tax on realised earnings on balances over $3 million) and the LISTO increase start earlier, from 1 July 2026. A proposed 30% minimum tax on discretionary trust distributions starts from 1 July 2028. All of these were announced in the 2026-27 Federal Budget on 12 May 2026 and are not yet law.

Is negative gearing being abolished?

No. Negative gearing is not being abolished. Under the proposal, net rental losses on established residential dwellings acquired on or after 7:30pm on 12 May 2026 are "quarantined" - meaning they can be deducted against your residential rental income or residential capital gains, but not against your salary, wages or other income. Any unused losses carry forward to future years. New dwellings are unaffected, and properties you already held before that moment keep today's rules.

Does this affect my current tax return?

No. None of the announced changes affect your current FY 2025-26 tax return. The negative-gearing and CGT measures are proposed to start from 1 July 2027, so the earliest return they could touch is FY 2027-28. The super and LISTO changes are proposed from 1 July 2026. Your negative gearing, your 50% CGT discount and your deductions for this year are unchanged. This is general information, not advice - confirm with your accountant.

What replaces the 50% CGT discount?

Under the proposal, from 1 July 2027 the flat 50% capital gains tax discount is replaced by two things working together: (a) inflation indexation of your cost base using CPI, so only the real gain above inflation is taxed, and (b) a minimum 30% tax applied to the gain. The change applies to gains that accrue after 1 July 2027 - any gain built up before that date keeps the current 50%-discount rules. This is a proposed measure, not yet law.

Is this law yet?

No. These measures were announced in the 2026-27 Federal Budget on 12 May 2026, and a Bill was introduced to Parliament on 28 May 2026. The Bill has not passed, so none of it is law. The detail, dates and thresholds could change as it moves through Parliament, or the measures may not pass at all. Treat everything on this page as a guide to what has been proposed, not a statement of current law.

Do the negative gearing changes apply to new properties?

No. New residential dwellings are unaffected by the negative-gearing quarantining proposal. The change targets established (existing) residential dwellings acquired on or after 7:30pm on 12 May 2026. If you buy a brand-new dwelling, you can continue to deduct net rental losses against your other income under the existing rules as proposed. This is a proposed measure and could change.

What is the super change for balances over $3 million?

From 1 July 2026, super balances above $3 million are proposed to be taxed an extra 30% on realised earnings on the portion above the threshold. Separately, the Low Income Superannuation Tax Offset (LISTO) rises by $500 to $810, and its income threshold lifts from $37,000 to $45,000. These are super measures rather than property-specific, but they matter for investors who hold property inside an SMSF. As with the rest, this is proposed and not yet law.

Sources

This is general information, not tax or financial advice. Every measure on this page is proposed in the 2026-27 Federal Budget and is not yet law - a Bill is before Parliament and the detail, dates and thresholds could change, or the measures may not pass. Always confirm how any change affects you with a registered tax agent before you buy, sell or restructure.

Work out your own numbers

Track your property's tax position, free

When the rules change, the investors who win are the ones who already know their numbers. Vestly keeps your purchase date, cost base, cashflow and live tax position on record for every property, all year round - so you can see exactly how any change affects you.

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