Nerida Conisbee, Chief Economist, Ray White Group
The Federal Budget has confirmed a major shift in housing tax policy, with negative gearing to be limited to new builds and CGT changes designed to reduce the tax advantage of investing in property. The intent is clear: reduce investor competition for existing homes and redirect capital into new housing. But while this may be politically neat, the housing market is more complicated. Australia’s affordability problem is not simply the result of investors buying established homes. It is the result of not enough homes being built in the places people need to live. These changes do not remove housing pressure – they risk shifting it from purchase prices into rents.
The changes are significant. Negative gearing will be limited to new builds from 1 July 2027. Established properties acquired before 7:30pm (AEST) on 12 May 2026 will be grandfathered until sold, while established properties acquired after that time will be subject to the new rules from 1 July 2027.
The 50 per cent capital gains tax discount will also be replaced from 1 July 2027 with cost-base indexation for assets held for more than 12 months, alongside a 30 per cent minimum tax on net capital gains. This means investors will generally be taxed on inflation-adjusted gains rather than receiving a flat 50 per cent discount, although gains accrued before 1 July 2027 will retain the existing discount and investors in new residential properties will be able to choose either the 50 per cent discount or the new indexation/minimum-tax treatment.
Together, the changes are designed to reduce the tax advantage of buying established investment properties and push more investor demand toward new supply.
Read Nerida’s full article where she analyses the following impacts of the Federal Budget:
1. Price pressure shifts to rental pressure
2. Rental supply becomes geographically distorted
3. Regional markets are left exposed
4. Rentvesting becomes harder for young buyers
5. Transaction volumes are likely to fall
6. The changes do not guarantee new supply
7. CGT revenue will be market sensitive
8. Labour mobility becomes harder
9. The rental market is not a static pool
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