The Australian Taxation Office (ATO) states plainly: “These measures are now law.” The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026, according to William Buck. Most changes apply from 1 July 2027.
Negative gearing
The ATO says negative gearing for residential property will be limited to new builds from 1 July 2027. Baker McKenzie explains that the change covers established dwellings acquired after 7:30pm AEST on 12 May 2026 (Budget night). Net rental losses on those properties will be quarantined. They can only be offset against residential property income, not your salary.
Protected: properties held before 7:30pm AEST on 12 May 2026, and new residential dwellings.
CGT
The ATO says the 50% CGT discount for individuals, trusts and partnerships will be replaced with cost-base indexation and a 30% minimum tax on gains that accrue after 1 July 2027. Gains accrued before that date keep the 50% discount, according to Corrs Chambers Westgarth. Your main residence stays exempt.
Still being finalised
William Buck notes that “important aspects of its practical operation remain subject to further legislation”. A second package received Royal Assent on 26 August 2026, and exposure draft legislation for Tranche 2 has been released. Details may change.
Market reaction
New investor loan commitments fell 8.6% by number and 10.2% by value in the June quarter, to $37.1 billion (ABS). Cotality says the changes “have already seen a sharp reduction in investor demand.” Canberra gross yields are 4.0% for houses and 5.5% for units (Cotality).
What this means for you
- Know your acquisition date relative to 7:30pm AEST on 12 May 2026.
- Ask your accountant how a new versus an established purchase would be taxed.
- Model cash flow without the salary offset from 1 July 2027.
- Let tax advice lead your loan structure (interest-only, offset, loan splits), not the other way round.
- Speak to a registered tax agent. We are not tax advisers.
See our investment property loans page and our post on building a property investment strategy.
Sources
- Australian Taxation Office, Tax reform: boosting home ownership, reforming negative gearing and capital gains tax — https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax
- Parliament of Australia, Bills Digest — https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd067
- William Buck, Federal Budget updates 2026 — https://williambuck.com/tools/federal-budget-2026/federal-budget-updates-2026/
- Baker McKenzie, Australia: Major Changes to CGT and Negative Gearing — https://www.bakermckenzie.com/en/insight/publications/2026/07/australia-major-changes-to-cgt-and-negative-gearing
- Corrs Chambers Westgarth, Capital gains tax and negative gearing amendments — https://www.corrs.com.au/insights/capital-gains-tax-and-negative-gearing-amendments-key-changes-and-implications
- Australian Bureau of Statistics, Lending indicators, June Quarter 2026 — https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release
- Cotality, Home Value Index, October 2026 — https://discover.cotality.com/hubfs/Article-Reports/COTALITY%20HVI%20OCT%202026%20FINAL.pdf
General information only. This article does not consider your objectives, financial situation or needs and is not credit advice. It is also not tax advice — speak to a registered tax agent about your circumstances. Seek personalised advice before acting. Figures are examples only. Credit Star — M.J. Siver trading as Credit Star Company, Credit Representative 506564 of BLSSA Pty Ltd ACN 117 651 760, Australian Credit Licence 391237.