15/05/2026
The recent Federal Budget has made plenty of headlines around negative gearing, capital gains tax (CGT), and property investment.
It is understandable that many landlords are asking themselves if it is time to sell.
Letās break it down and explore what has changed and what hasnāt.
Firstly, here is an explanation of terms you may hear being thrown around.
Indexation: Is an automatic adjustment to reflect inflation or rising prices.
Grandfathered: Existing arrangements keep the old rules after new rules are introduced.
Established Properties: Homes that have already been built and previously owned or lived in, not newly built homes.
Marginal Rate: Is the rate you pay on the next dollar you earn, it does not mean all your income is taxed at that rate- only a portion within that tax bracket.
Existing investors may be in a stronger position then they think.
One key point many are overlooking is that existing investors have effectively been protected through grandfathering provisions.
For landlords who already own established investment properties:
-the current negative gearing arrangements remain
-rental demand remains strong,
-property continues to be a long-term asset backed by value.
-CGT on gains built up to July 2027 are still taxed with the 50% CGT discount
In many cases, selling now could trigger unnecessary costs.
The biggest changesā¦
The Government has announced two major reforms affecting investment properties from 1 July 2027:
1. Negative gearing will be limited to new builds
Under the proposed changes, investors who purchase established residential properties after Budget night will no longer be able to offset rental losses against their wages or other personal income.
However, there are some important exceptions:
-Existing investment properties owned before Budget night are grandfathered under the current rules.
-New builds will still qualify for traditional negative gearing benefits.
-Losses on established properties can still be carried forward and offset against future rental income or capital gains.
Many current landlords will see little or no immediate change to the way their existing investments are taxed.
2. Capital Gains Tax changes
The Government has also announced that the current 50% CGT discount will be replaced with an inflation based calculation from 1 July 2027, alongside a minimum 30% tax rate on capital gains.
This does not mean investors suddenly lose all tax advantages overnight.
-The changes only apply to gains made after 1 July 2027.
-Current and existing owners keep the old 50% CGT discount on any gain built up before 1 July 2027.
-Investors in new builds may still have access to the current 50% CGT discount arrangements.
So should investors sell?
For many landlords, the answer may actually be āno not necessarily.ā
History has shown that uncertainty often creates emotional reactions in the property market.
Right now, Australia continues to face:
-low rental vacancy rates
-ongoing housing shortages
-strong population growth
-increasing construction costs
The Federal Government itself has stated these reforms are designed to encourage more housing supply, particularly new builds.
What this could mean in reality is fewer investors purchasing established rental properties in the future. If that happens, well-maintained existing rentals could become even more valuable due to reduced supply.
Before making any major decisions, it is worth taking the time to fully understand how these changes actually apply to your situation.
