Australian property tax reform 2026

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 was enacted on 26 June 2026, introducing significant structural changes to the Australian property investment landscape Verified Answer #3 Verified Answer #7. These reforms, largely effective from 1 July 2027, shift the market away from tax-arbitrage strategies toward structural efficiency and supply-side investment Verified Answer #3 Verified Answer #4.

Negative Gearing Restrictions

For residential properties acquired after 7:30 pm (AEST) on 12 May 2026, the ability to offset rental losses against personal wage income is restricted Verified Answer #7 Verified Answer #5.

Established Properties: Losses from established residential assets can no longer be deducted against salary; instead, they must be quarantined to offset future residential rental income or capital gains Verified Answer #7 Verified Answer #5.
New Builds: Newly constructed residential properties are exempt from these restrictions, allowing investors to continue offsetting losses against their marginal wage income Verified Answer #7 Verified Answer #5.
Investment Strategy: Investors are advised to perform Net Present Value (NPV) audits on new builds to ensure the tax benefits are not already priced into the asset by developers Verified Answer #3.

Capital Gains Tax (CGT) Overhaul

Starting 1 July 2027, the flat 50% CGT discount for individuals and trusts is replaced by a new framework Verified Answer #7 Verified Answer #5.

Indexation Model: The discount is replaced by an inflation-adjusted cost-base indexation model for assets held longer than 12 months, meaning only "real" gains above inflation are taxed Verified Answer #5.
30% Minimum Floor: A new 30% minimum tax rate applies to net capital gains for individuals and trusts Verified Answer #3 Verified Answer #5.
Exemptions: Complying superannuation funds remain exempt from the 30% minimum floor and retain their existing 33.3% CGT discount Verified Answer #4.
New Build Choice: Investors in new residential builds may choose between the old 50% CGT discount or the new indexation model Verified Answer #5.

Impact on First-Home Buyers (FHBs)

While the reforms aim to improve affordability, they introduce new challenges for those saving for a deposit Verified Answer #2 Verified Answer #8.

Deposit Stagnation: The 30% minimum CGT floor applies to all assets, including Exchange Traded Funds (ETFs), which many young savers use to build deposits Verified Answer #8.
Tax Burden: Modeling suggests the reform can triple the effective capital gains tax rate for young investors using brokerage accounts, potentially lengthening the time-to-deposit by 6 to 10 months Verified Answer #2 Verified Answer #4.
Supply Mismatch: Incentives for new builds may lead developers to prioritize high-density "investor-grade" apartments rather than the types of homes preferred by first-home buyers Verified Answer #2.

Market Conditions and Entity Structuring

The property market experienced a demand shock in mid-2026, with national home prices falling 0.3% in June 2026 Verified Answer #9.

Price Declines: Sydney and Melbourne saw sharper falls of 1.2% and 1.0% respectively in June 2026, driven by tighter monetary conditions and reduced investor demand following the budget announcement Verified Answer #9.
Corporate Vehicles: The 30% minimum tax floor for individuals has narrowed the efficiency gap between personal ownership and corporate structures, as companies already pay a flat corporate tax rate Verified Answer #3.
Venture Capital: Early-Stage Venture Capital Limited Partnerships (ESVCLPs) remain a tax-efficient vehicle for high-income earners, as realized gains in these structures are fully tax-exempt and bypass the 30% CGT floor Verified Answer #6 Verified Answer #1.