The 2026 federal budget was handed down on Tuesday 12 May, and the property changes are getting the loudest coverage. If you’ve been wondering whether to panic about your investment property, or what any of this means for your business, here’s the plain English version.
A quick caveat: this is an announcement, not yet law. Draft legislation and detail are still to come, and some pieces could shift. Treat what follows as a guide. For anything that affects your specific situation, your accountant or tax agent is the right call.
Property: the big headline
If you already own an investment property, or signed a contract before 7:30pm AEST on Tuesday 12 May 2026 (5:30pm WA time), nothing changes for you. Existing rules continue indefinitely, including for properties under contract that haven’t settled. This is “grandfathering” and it’s the most important detail for current investors.
For new purchases of established homes after that cut-off, from 1 July 2027 you can still claim all the usual deductions (interest, rates, insurance, repairs, depreciation) against rental income. You won’t be able to offset a net rental loss against wages or business income. Excess losses carry forward to future years against rental income or capital gains on rental property.
New builds are carved out. Build or buy a genuinely new dwelling and negative gearing remains available, with a choice between the existing 50% CGT discount and the new system when you sell. The policy aim: keep encouraging investment in new housing supply while pulling back the tax advantage on existing housing.
Capital gains tax
From 1 July 2027, the flat 50% CGT discount is being replaced with an inflation-linked discount plus a minimum 30% tax on capital gains. This applies to most CGT assets, including shares as well as property.
Only gains that accrue after 1 July 2027 are taxed under the new system. Anything your property gained before that date keeps the 50% discount. Sell in 2028, the gain is split at the 1 July 2027 line.
Pensioners and income support recipients are exempt. The main residence exemption isn’t changing. Super funds aren’t affected.
Small business: the helpful pieces
Most of the property noise has drowned these out, but there’s plenty tucked into the budget for small business owners:
- The $20,000 instant asset write-off is permanent from 1 July 2026 for businesses with turnover under $10 million
- Loss carry-back is returning from 2026-27 (apply this year’s tax loss against tax already paid in an earlier year, generating a refund)
- A new $1,000 instant work-related deduction is available for individuals from 2026-27, no receipts needed
- A new permanent Working Australians Tax Offset worth up to $250 begins July 2027
Trusts
Discretionary trusts will pay a minimum 30% tax on taxable income from 1 July 2028, with some exceptions. Three-year rollover relief from 1 July 2027 is available for businesses that want to restructure ahead of the change. If you trade through a trust, start the conversation with your accountant well before 2028.
What to do now about the 2026 federal budget
If you already own an investment property, you’re grandfathered. No immediate trigger to sell.
If you’re building or buying a new dwelling, your options on negative gearing and CGT are intact. Worth confirming with your accountant that what you’re building meets the eventual “new build” definition once detail is released.
If you’re thinking about buying an established home as an investment after the cut-off, the maths from July 2027 onward looks different. Model it properly before you commit.
On the small business side, the changes are genuinely useful, particularly the permanent instant asset write-off. You can buy the gear, the laptop, the espresso machine, and write it off in the year you bought it without wondering whether the rule will still be there next year.
One last note: the next federal election is due by September 2028, only 14 months after the property changes start. Other countries have seen similar reforms wound back by incoming governments, so plan thoughtfully and try not to rush.
If any of this leaves you with more questions than answers, that’s fair. Reach out and we can talk it through, or I can point you toward an accountant who can run the numbers properly.
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