Landlords Hit With Tax Changes

The Federal Budget has announced major changes in housing taxes, limiting negative gearing to new builds and changing the way that Capital Gains Tax is calculated.

Negative gearing will be limited to new builds from 1 July 2027, although investors will still be able to claim negative gearing on existing properties bought before 7:30 pm on 12 May 2026 until sold.

From July 1 2027, the 50% capital gains tax discount will be replaced with cost-based indexation for assets held for more than 12 months, plus a 30% minimum tax on net capital gains.

Capital 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% discount or the new indexation policy.

Treasurer Jim Chalmer says the changes will help Australians access the property ladder.

Property Investment Professionals of Australia chair Cate Bakos warns that not all investors will be excited about buying brand new property.

“I think we can anticipate seeing investors opting for other asset classes and not necessarily jumping into property,” she says.

“We’ll see a decline in the number of investors post this decision.”