Key Changes to CGT and Negative Gearing from the 2026-27 Federal Budget

TL;DR: Albo and Grim Jim dressed it up as “fixing housing affordability,” but it’s really just two green Grinches stuffing giant sacks labelled “More Money For Us” while cackling “Reform? Nah… just a tax grab, mate.”

They promised no changes.
They changed everything.
Classic Labor.

Your property and share portfolios are now officially invited to pay more tax for the greater good!

Ok the serious summary is below:

Negative Gearing Reforms (effective 1 July 2027)

• Limited to new builds only: Investors can fully deduct rental losses against other income (e.g., salary) only for newly constructed residential properties. This aims to encourage housing supply.
• Established properties: For properties acquired after 7:30pm AEST on 12 May 2026, losses are quarantined — they can only offset rental income or capital gains from residential properties. Excess losses carry forward but cannot reduce wages or other income.
• Grandfathering: Properties held (or contracts entered) before budget night remain fully eligible for negative gearing until sold. No retrospective changes for current holdings.
• Exemptions for build-to-rent, affordable housing, and some government projects.

Goal: Cool investor demand for existing homes to improve affordability for first-home buyers (est. +75,000 over 10 years) while boosting new construction.

In Reality: Many economists and critics argue these measures may have limited impact on prices and rents given Australia’s severe ongoing housing supply shortage.

The 2026 Budget negative gearing changes apply exclusively to residential rental properties. They do not touch shares, crypto, ETFs, commercial property, or other asset classes.

Existing rules for shares remain in place:

·         You can still use a margin loan (or other borrowed funds) to buy shares.

·         Interest and other holding costs are generally tax deductible.

·         If dividends + other income from the shares are less than the interest + costs, you can claim the net loss against your other income (e.g. salary) — i.e. classic negative gearing continues as before.

This is explicitly confirmed in the Budget papers: “Changes to negative gearing will only apply to residential property. Commercial property and other asset classes, such as shares, will remain subject to existing arrangements.”

Capital Gains Tax (CGT) Reforms (effective for gains arising after 1 July 2027)

• Replaces 50% CGT discount: The flat 50% discount for assets held >12 months ends for most investors (individuals, trusts, partnerships). Replaced by cost-base indexation (tax only real gains above inflation, using CPI) + a minimum 30% tax rate on those real gains.
• Broad application: Applies across most assets, including:
  • Residential and commercial property
  • Shares (ASX, international, ETFs)
  • Crypto and digital assets
  • Collectibles, gold, and other investments
• New residential builds exception: Investors can choose the old 50% discount or the new indexation + 30% minimum rules.
• Transitional rules: Gains accrued before 1 July 2027 on existing assets keep the 50% discount. One-year grace period for post-budget acquisitions. Valuations may be required at 1 July 2027. Super funds largely unaffected.

Impact example (non-housing): A $100k gain on shares or crypto (held >12 months) was previously taxed on $50k. Under the new system, only the inflation-adjusted real gain is taxed, with at least 30% effective rate in low-income scenarios. This could raise or lower tax depending on inflation and your marginal rate.

Overall Context: These are among the most significant tax reforms changes in decades. They try and rebalance incentives away from speculative existing property investment toward new housing supply and (potentially) other assets like shares. Existing investments are largely protected. Effects on prices, rents, and markets are hotly debated.

The Coalition and One Nation has pledged to repeal them if elected.

Disclaimer: Rules are complex with individual variations. Consult a tax advisor or accountant for personalised advice based on your circumstances. Official details are in the Budget papers.

This information contains unsolicited general information only, without regard to any individual’s investment objectives, financial situation or needs. It is not specific advice for any particular investor or trader. Investment in the stock market involves risk.

This information may not take into account your investment objectives or financial situation, and you should obtain advice based on your own individual circumstances before making an investment decision.

This information is made available to you by ANDIKA Pty Ltd ABN 41 117 403 326, a licensed securities and derivatives dealer (AFSL # 297069).