The 2026–27 Federal Budget introduces a range of changes to Australia’s property tax and housing settings. While the announcements have drawn attention, the changes are designed to take effect gradually, with clear transition periods and protections in place.
At its heart, the Budget adjusts how property investment is incentivised over time. What hasn’t changed are the fundamentals that underpin Australia’s property market, including population growth, ongoing housing undersupply and the long‑term appeal of home ownership.
A period of adjustment, not disruption
Rather than signalling abrupt market change, the Budget is structured as a period of adjustment. Key measures include grandfathering arrangements for existing property owners and a transition window extending to 1 July 2027, providing time for people to understand the changes and plan ahead based on their individual circumstances.
This measured approach reflects an intention to rebalance future investment behaviour, particularly in established housing, while continuing to support new housing supply.
What’s Changed in The Budget
Several updates are relevant for people buying, selling, owning or managing property:
Negative gearing
From 1 July 2027, deductions on losses from established residential properties can only be offset against rental income or capital gains from residential property, rather than other income such as wages. Any unused losses are carried forward. Negative gearing in its current form remains available for new builds.
Existing investors are grandfathered, meaning anything purchased before 7:30pm on 12 May 2026, including contracts exchanged but not yet settled, is unaffected. Commercial property is exempt from the new negative gearing restrictions that apply to established residential property, although commercial assets remain subject to capital gains tax discount changes from 1 July 2027.
Capital gains tax (CGT)
From 1 July 2027, the 50% capital gains tax discount will be replaced for individuals, trusts and partnerships with a cost base indexation model plus a 30% minimum tax on net capital gains. Superannuation funds and the main residence exemption are unaffected.
Assets bought before 1 July 2027 retain the 50% discount only on gains accrued up to that date, with gains accruing afterwards falling under the new indexation and minimum tax arrangements. Investors in new builds can choose between the existing 50% discount and the new indexation approach. Pensioners and income‑support recipients are exempt from the 30% minimum capital gains tax rate.
Trusts
From 1 July 2027, a 30% minimum tax will apply to discretionary trust distributions. This change is particularly relevant for family farming and small‑business owners who use trust structures.
Housing supply and foreign investment
The Budget includes measures aimed at supporting housing supply, committing $2 billion to councils and utilities for enabling infrastructure such as roads and services. This funding is expected to support the delivery of around 65,000 new homes over the next decade. Total Federal housing investment now sits at roughly $47 billion.
The ban on foreign buyers purchasing established homes has been extended to mid‑2029.
Cost‑of‑Living Measures
The Budget also outlines cost‑of‑living measures, including a permanent $250 Working Australians Tax Offset from the 2027–28 financial year, a $1,000 instant tax deduction for work‑related expenses from 2026–27, and a reduction in the lowest marginal tax rate from 16% to 15%, with a further reduction to 14% from July 2027.
What This Means for Buyers, Sellers and Investors
For buyers
First‑home buyers may see modestly improved access in selected segments as investor demand for established homes recalibrates. Owner‑occupiers are expected to continue driving most established markets, and competition for quality, well‑located homes is likely to remain strong.
New builds, off‑the‑plan homes and house‑and‑land packages may become relatively more attractive to investors, which can lift activity in that segment. Foreign buyer restrictions on established homes remain in place through to mid‑2029.
For sellers
Vendors of well‑presented and well‑located homes continue to be supported by owner‑occupier demand. Investment‑grade vendors are expected to see a measured market rather than a rush ahead of the 1 July 2027 transition.
The right time to sell remains dependent on personal circumstances and local market conditions rather than Budget‑driven urgency.
For Investors
Existing arrangements are grandfathered and remain unchanged. Future investment activity is expected to favour new builds, longer holding periods and yield‑focused strategies rather than reactive selling.
Trust structures, entities and timing should be reviewed with an accountant ahead of 1 July 2027, with portfolio reshaping more likely than widespread sell‑downs.
How Elders is Here to Support You
Markets move, policy settings change and the property landscape evolves. Through these changes, Elders is here to provide clarity, context and local insight.
With more than 185 years of experience across residential, rural, commercial and property management, Elders supports clients by helping explain what the changes mean, how they interact with local market conditions and what to consider moving forward.
Whatever your property plans, your local Elders team is here to support you with calm conversations, experienced perspective and long‑term thinking.
*source: https://budget.gov.au/