On 12 May 2026, as part of the 2026–27 Federal Budget, the Australian Government announced significant reforms to negative gearing and capital gains tax (CGT) arrangements. These measures have now become law and will take effect from 1 July 2027.
Key Reforms
The new legislative framework contains two core reforms:
- Negative gearing restrictions: Will be limited to new residential property investments only. Existing properties will no longer be eligible.
- Capital gains tax discount adjustment: The existing 50% CGT discount will be replaced with a cost base indexation method and a minimum 30% tax rate on capital gains, applying to individuals, trusts, and partnerships.
Impact on Existing Investments
The Government has specifically considered the effect on existing investors. Properties held at the time of announcement—7:30 pm on 12 May 2026 (Australian Eastern Standard Time)—will receive grandfathering protection. This means changes to negative gearing will not affect these existing investments.
The CGT reforms apply more specifically. New CGT rules will only apply to gains generated after 1 July 2027. This provides investors with a reasonable transition period to adjust their investment strategies.
Planning Your Investment Strategy
If you own residential investment properties or plan to invest, understanding the specific details of these reforms is essential. We recommend consulting with a tax professional to ensure your investment strategy complies with the new tax rules and optimises your tax outcome.
For more detailed information, download our negative gearing and capital gains tax guide.
