13/05/2026
Last night, Treasurer Jim Chalmers has delivered his fifth budget, "Resilience and Reform," with a clear focus on housing supply and affordability, and controversial property taxation changes headlining.
The following commentary is provided by REIA CEO, Scott Rollason, who attended the Budget lockdown yesterday:
• The 50% current capital gains discount will be replaced with inflationary indexation from July 2027 (1-year grace period). All assets (including housing) will receive the current 50% discount on any capital gain until July 1, 2027, before switching to a pre-1999 inflation-indexation model for gains post 1 July 2027. New dwelling builds will retain the option to use the 50 per cent discount.
• One of the big surprises in the Budget is that all Capital gains across all assets from 1 July 2027 will be subject to a minimum 30% tax rate. The introduction of the minimum tax will for example reduce the benefit of taxpayers deferring capital gains realisation to years where their marginal tax rates are low. The silver lining is that the only asset class exempt are new house builds that elect the 50% CGT discount option.
• The ability to negative gear a property and offset against other income will be restricted to new dwellings from July 2027. Investors that hold properties prior to Budget Night will not be impacted by the change and will be able to continue to negative gear properties (held before Budget Night) and offset this against their other income. A transitionary measure will be in place for existing property acquired after Budget Night whereby they can be negatively geared and offset against other income until July 1, 2027, but not after that.
• However, it is worth noting post July 2027 when an investor has excess losses on existing residential investment properties (purchased after Budget Night), they will be able to carry forward that excess to offset residential property income in future years.
• The Government forecasts that an additional 75,000 Australians to become owner occupiers over the next decade as a result of these changes and will result in 35,000 less homes built over 10 years (Qaive modelling would suggest a higher figure). When offsetting this against to the additional 65,000 homes outlined below the Budget proposes a net of 30,000 new additional homes built over 10 years.
• The key housing measures aimed to negate the supply impact of property taxation settings will be a $2 billion investment to build enabling infrastructure like water and sewerage pipes for housing developments, forecasted to add an extra 65,000 homes over a decade. This investment via the State and Territories will be tied directly to fast track approval conditions.
• Additionally, they are extending their ban on foreign investors buying existing homes and helping to fix the youth housing penalty, to secure homes for 4,000 young people at risk of homelessness.
