With the federal budget landing and the speculation behind us, it’s time to properly assess what these changes mean for our core investor client group. A lot of what was announced — negative gearing, CGT, trust tax — sits at the centre of how investment decisions are made, how you borrow, and what your cashflow looks like.
These reforms have been announced but not yet legislated. The detail may shift as the legislation is drafted. Where we state something definitively below, the source is the Budget papers or Treasury fact sheet.
At a glance: timeline of changes
| Reform | Effective | Who’s affected |
|---|---|---|
| Negative gearing restricted to new builds | 1 July 2027 | New purchases of established residential property after budget night |
| CGT 50% discount replaced with CPI indexation + 30% minimum tax | 1 July 2027 | All CGT assets held by individuals, trusts, and partnerships |
| 30% minimum tax on discretionary trusts | 1 July 2028 | Discretionary trusts (fixed trusts, super, charitable, and deceased estates exempt) |
| Trust restructuring window (CGT-free) | 1 Jul 2027 – 30 Jun 2030 | Investors moving out of discretionary trust structures |
Negative Gearing
From 1 July 2027, negative gearing on residential investment property is limited to new builds. If you purchase an established property after 7:30pm AEST 12 May 2026, rental losses can no longer be offset against your salary or other non-property income. Instead, losses are quarantined to residential rental income and property capital gains only. Unused losses carry forward.
Properties owned (or under contract) before budget night are fully grandfathered. Nothing changes until you sell. Properties purchased between budget night and 30 June 2027 can be negatively geared during that window, but fall under the new rules from 1 July 2027.
These changes only impact new purchases of established residential property. Other assets such as commercial property, ETFs, and shares can still be negatively geared as before. For investors who use debt recycling strategies, this is worth noting. The mechanics of recycling non-deductible debt into deductible investment debt still work for non-residential assets.
Super funds (including SMSFs), widely held trusts, and commercial property are excluded.
What qualifies as a “new build”
The property must add to housing supply. Off-the-plan apartments, house-and-land packages, vacant land construction, and knock-down-rebuilds that increase dwelling count all qualify. Renovations, granny flats, and like-for-like knock-down-rebuilds do not. Subsequent purchasers of a new build don’t inherit the exemption.
Capital Gains Tax
From 1 July 2027, the 50% CGT discount is replaced with CPI cost base indexation. Your purchase price is adjusted upward by inflation each year, and you pay tax on the real gain above inflation. A 30% minimum tax applies as a floor regardless of your marginal rate.
This applies to all CGT assets (property, shares, ETFs, business assets) held by individuals, trusts, and partnerships. Not just property.
For assets already held, the gain is split. Growth up to 1 July 2027 keeps the old 50% discount. Growth after that date falls under the new rules. This is different from the negative gearing grandfathering, which fully protects existing arrangements. For CGT, only the historical portion of your gain is protected.
New build investors can choose whichever CGT method gives them the better outcome.
Main residence exemption, small business CGT concessions, and super fund CGT discounts are all unchanged.
Trust Tax
From 1 July 2028, a 30% minimum tax applies to the taxable income of discretionary trusts. The trustee pays the tax. Non-corporate beneficiaries receive a non-refundable tax credit, meaning beneficiaries on marginal rates below 30% effectively overpay, and the excess isn’t refunded.
Exemptions include fixed trusts, super funds, charitable trusts, deceased estates, primary production income, and existing testamentary trusts.
A three-year restructuring window (1 July 2027 to 30 June 2030) allows investors to move out of discretionary trust structures without triggering a CGT event.
Our Take — What This Means for Investors
What follows is our perspective based on industry experience and conversations with lenders and referral partners. These are not predictions and should not be taken as advice. Please consult your tax accountant and financial planner before making any major decisions around buying or selling.
New builds become the clear frontrunner. From 1 July 2027, the economics favour new builds. Full negative gearing, full depreciation, and the choice of CGT method make them materially more attractive. House-and-land packages, off-the-plan apartments, and knock-down-rebuild projects that increase dwelling count are all worth considering. The process, complexity, and timing should all be factored in — this is an area we can help with as brokers.
Existing investment properties are not a signal to sell. If you already hold investment property, your negative gearing benefits are retained. The CGT changes do apply to future growth, but selling into a changing market carries its own risks, and the grandfathered negative gearing is an asset in itself. The likely outcome is that most investors hold. Fewer properties coming to market means fewer rentals being added, which puts upward pressure on rents over time.
The market will slow down, but it won’t crash. We think these changes are the right move for the property market overall. The combined effect of reduced investor activity on established property, higher CGT on exit, and tighter trust structures will have a dampening effect on market activity. That should put some downward pressure on prices, which is the intended outcome. But this isn’t a crash scenario. Supply and demand are still very real forces. If new builds can’t keep up with redirected demand and fewer existing properties come to market, the more likely outcome is that property prices become more stagnant rather than seeing dramatic growth or decline. In the long term, we think this is healthier for the economy and for the next generation of home buyers who desperately need some relief from the pace at which property prices have outgrown incomes over the last few decades.
Buying decisions will need more planning than before. The initial instinct will be to chase new builds, and we expect to see that play out in the short term. But new build stock is limited, construction timelines are long, and increased demand will push costs up. As that reality sets in, we think investors will reassess established property and recognise that the rental loss carry-forward still has real value. Those quarantined losses reduce your CGT bill at exit, and in some cases the long-term tax outcome may not be dramatically different. The bigger shift is around cashflow during the holding period. Investors who currently rely on PAYG tax variations to reduce their withholding and improve monthly cashflow will lose some of the benefit on purchase of established properties. That needs to be examined more closely on a deal-by-deal basis. The days of buying purely on tax benefits are over. Fundamentals matter more than ever.
The CGT changes go well beyond property. This is one of the bigger stories coming out of the budget. The shift from the 50% discount to indexation and the 30% minimum tax applies to all CGT assets, not just residential property. That has real implications for entrepreneurs building businesses in Australia, employees who receive equity through share schemes, and anyone holding shares or ETFs outside of super. For a startup founder who has spent years building value in their company, the after-tax outcome on exit has just changed significantly.
SMSF becomes a significantly more attractive vehicle. Super funds are exempt from the negative gearing restrictions, the CGT discount inside super is unchanged, and the 30% trust minimum tax doesn’t apply. For investors building long-term wealth through property, the gap between holding personally and holding through an SMSF has widened. This is a conversation worth having with your financial planner.
Trust structures need a review. For those holding property through discretionary trusts, the combined effect of all three changes makes a conversation with your accountant worthwhile. Quarantined losses, higher CGT, and the 30% minimum distribution tax all compound. The restructuring window gives you until June 2030 to make changes without triggering a CGT event, so there’s no need to rush — but it’s worth thinking through how your loans are structured alongside any entity changes. Take the time to get it right.
Bucket companies lose their advantage. The new rules effectively remove the benefit of distributing trust income to a beneficiary company at the 25% company tax rate. The trustee now pays 30% before any distribution reaches the company, and corporate beneficiaries don’t receive a tax credit for the trustee-level tax. For those currently using this structure, it may be worth exploring whether a company entity becomes a more suitable vehicle. One for your accountant.
What We’re Watching on the Lending Side
The key question we’re working through is how lenders will assess borrowing capacity when the investor can no longer offset rental losses against their salary.
Right now, that tax benefit effectively improves your after-tax position, which supports how much you can borrow. Remove it for established property, and the borrower’s position looks weaker on paper, even if the long-term investment still makes sense.
We’ve spoken with a number of lenders and they’re currently running through scenarios internally. We expect broader announcements in the coming weeks on how serviceability models are adjusted.
We’ll keep you updated as we hear from them. As always, if you have any questions or want to talk through what this means for your situation, don’t hesitate to reach out.
If you’d like to speak with a financial adviser or accountant in our network, send us an email at hello@trimark.com.au and we’ll get back to you within 24 hours.