12/05/2026
๐๐ก๐ ๐๐๐๐-๐๐ ๐
๐๐๐๐ซ๐๐ฅ ๐๐ฎ๐๐ ๐๐ญ has introduced the most aggressive housing policy shifts in decades, specifically targeting property investors to favor ๐๐๐๐๐-๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐
๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐๐.
The budget effectively splits the property market into two categories:
Established vs. New Builds.
๐๐จ๐ฉ๐๐๐ก๐๐จ๐๐๐ ๐๐ง๐ค๐ฅ๐๐ง๐ฉ๐๐๐จ: Effective immediately (from 7:30 PM on May 12, 2026), negative gearing is abolished for any established home purchased by an investor. Losses can now only be offset against rental income or future capital gains from that same property not your salary.
๐๐๐ฌ ๐ฝ๐ช๐๐ก๐๐จ: These remain fully exempt from the negative gearing cuts. The governmentโs goal is to funnel investor capital away from existing stock and into new construction to boost supply.
๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐๐๐ข๐ง๐ฌ ๐๐๐ฑ (๐๐๐) ๐๐ฏ๐๐ซ๐ก๐๐ฎ๐ฅ
From July 1, 2027, the standard 50% CGT discount is being replaced by a cost-base indexation model (similar to the pre-1999 system). How it works: You will only pay tax on the profit that exceeds the rate of inflation. The Catch: There is a new 30% minimum tax rate on net capital gains. Exemption: Investors in new builds can choose between the old 50% discount or the new indexation model, providing a significant tax advantage for buying new over old.
๐๐ฆ๐ฉ๐๐๐ญ ๐จ๐ง ๐๐ซ๐ข๐๐๐ฌ ๐๐ง๐ ๐๐๐ง๐ญ๐ฌ
The immediate market reaction suggests a complex shift in supply and demand:
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๐จ๐ซ ๐๐ฎ๐ฒ๐๐ซ๐ฌ: Treasury models suggest these changes will help approximately 75,000 Australians enter home ownership by reducing competition from investors for existing houses.
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๐จ๐ซ ๐๐๐ง๐ญ๐๐ซ๐ฌ: There are concerns that investors may hike rents to cover the loss of tax benefits. Independent modeling (SQM Research) warns that rents in Sydney and Melbourne could rise by up to 20% as the rental supply of established homes potentially shrinks. For Supply: While the government is investing $2 billion in "enabling infrastructure" (roads/sewers) to unlock 65,000 new homes, industry groups like the HIA warn that the overall tax burden could actually lead to 35,000 fewer private homes being built over the next decade.
