Review: What the 2026 Federal Budget Changes Are Likely to Mean for Property Investors in Australia

Why read this article

Budget property changes explained

• What the proposed Federal Budget property changes may involve
• Why eligible new-build property is now central to the investor discussion
• How existing investors, SMSFs and trusts may be affected

The 2026 Australian Federal Budget has placed property investing back at the centre of national discussion.

For property investors, the main areas of interest are negative gearing, Capital Gains Tax, new-build property, established residential property, SMSFs and discretionary trusts.

The Government has framed the reforms as part of a broader effort to improve housing access, reduce tax distortions and redirect more investor activity towards new housing supply. The official Budget materials state that, from 1 July 2027, negative gearing for residential property investments will be limited to new builds, while existing arrangements will remain unchanged for properties held before Budget night.

The most important point is that the proposed changes do not treat all property in the same way. Under the announced settings, eligible new-build residential property appears to retain several important policy advantages, while some future established property purchases may be treated differently.

This article explains what the proposed changes may mean, what investors should understand, and where Accrue Real Estate may help clients assess the property side of future opportunities.

This article is general information only and does not provide financial, taxation, legal, SMSF, lending or investment advice.

1. The Main Budget Changes for Property Investors

The Budget proposes two major property-related tax reforms from 1 July 2027.

First, negative gearing for residential property investments will be limited to new builds. This means investors who buy eligible new-build residential properties may still be able to deduct rental losses from other income, including salary and wages. Existing arrangements are proposed to remain unchanged for properties held before Budget night. Investors who buy established housing after Budget night may still deduct losses against residential property income and may carry forward unused losses, but will not be able to deduct those losses against other income such as wages.

Second, the Government proposes to replace the current 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains from 1 July 2027. The Budget materials also state that investors in new builds will be able to choose between the existing 50% CGT discount and the new arrangements.

In practical terms, the proposed changes may create a clearer distinction between:

• Existing investment properties held before Budget night
• Future purchases of established residential property
• Eligible new-build residential property
• Property held through superannuation, SMSFs, trusts or other structures

The details matter because each category may be treated differently under the proposed rules.

Accrue Insights

For new-build investors, the important point is that eligible new-build residential property appears to retain more flexibility under the proposed rules than many future established property purchases.

For existing property investors, the grandfathering provisions are also important. Investors who already held property before Budget night may not need to make rushed decisions based on headlines alone, because existing negative gearing arrangements are proposed to remain in place until the property is sold.

For Accrue clients, this reinforces the importance of understanding the property category before comparing opportunities. In a post-Budget environment, “property” is no longer one broad conversation. Property type, purchase timing, ownership structure and whether the property genuinely adds to housing supply may all become more important.

2. Negative Gearing: What Is Proposed to Change?

Negative gearing generally occurs when the deductible costs of holding an investment property exceed the rental income produced by that property.

Under current arrangements, many investors can offset that rental loss against other income, such as wages or salary. The Budget tax explainer states that, from 1 July 2027, losses related to existing residential investment properties purchased from 7:30pm AEST on 12 May 2026 will only be deductible against other income from residential properties, including capital gains. Excess losses can be carried forward to offset residential property income in future years.

This is a major distinction.

It does not mean all deductions disappear. Rather, the proposed rules may change the type of income those losses can be offset against and the timing of when those losses can be used.

For established residential property purchased after Budget night, an investor may need to carry forward losses instead of using them immediately against wage income. That could affect cash flow assessment and holding-cost calculations.

For eligible new-build property, the Budget materials state that investors will continue to have access to negative gearing. If they make a rental loss on a new build, they can still use that loss to reduce taxable income, including salary and wages, subject to the final legislation and individual circumstances.

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For new-build investors, this is one of the most important proposed differences. Eligible new builds may continue to access negative gearing treatment, which may assist some investors in managing annual holding costs.

For existing investors, the important point is protection. Properties already held before Budget night are proposed to be grandfathered, meaning existing arrangements can continue until the property is sold.

For Accrue, the insight is that investors may need a more detailed comparison between established and new-build property. A property should not be assessed only by price or rent. It should also be assessed by timing, property type, local supply, rental demand, ownership considerations and whether it appears to meet the new-build criteria.

This is important because not every property that looks new will necessarily qualify.

For example, a newly constructed apartment bought off the plan may be treated differently from a renovated established property. A duplex replacing one freestanding house may be treated differently from one new freestanding house replacing another freestanding house.

The detail will matter.

Investors may need to ask:

• Does the property genuinely add to housing supply?
• Has it been previously sold?
• Has it been occupied?
• Does it meet the final legislative definition of an eligible new build?
• Is the location supported by genuine rental demand?
• Is the market at risk of oversupply?

These are questions that should be considered alongside professional tax and legal advice once the final rules are clear.

Accrue Insights

For new-build investors, this section highlights the value of proper sourcing and due diligence. If eligible new builds receive different treatment under the proposed rules, then identifying the right new-build opportunities before the wider market reacts may become more important.

For existing investors, this does not necessarily reduce the importance of current holdings. If existing properties are grandfathered, they may retain treatment that future established property purchases do not receive.

For Accrue, this is where research-led sourcing becomes critical. We help clients understand the difference between simply buying something new and assessing whether the property is genuinely well positioned: the right location, the right supply profile, the right tenant demand and the right long-term market drivers.

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For new-build investors, this is a significant distinction. Eligible new-build investors may retain a choice between two CGT methods, rather than being moved entirely into the new framework.

For existing investors, the transitional arrangements matter. The Budget states that the CGT reforms will only apply to gains arising after 1 July 2027. Gains before that date are proposed to be treated under current arrangements, subject to final legislation and valuation rules.

For Accrue clients, the important property-side insight is that CGT should not be the only reason to buy. However, where eligible new-build property receives more flexibility under the proposed rules, it may become even more important to assess the quality of the asset, location, rental depth and long-term resale demand.

5. Transitional Rules and Existing Property Investors

The Budget does not propose applying the negative gearing changes retrospectively to properties already held before Budget night.

The tax explainer states that properties held at the time of announcement, including where a contract has been entered into but not yet settled, will be allowed to be negatively geared in future years until sold. It also states that established residential properties purchased between announcement and 30 June 2027 may be negatively geared during that period, but not from 1 July 2027. Established properties purchased from 1 July 2027 will not be able to be negatively geared.

For CGT, the transitional rules are different. Assets owned before 1 July 2027 and sold after 1 July 2027 will be treated under current arrangements for gains made before that date, and under the new arrangements for gains made after that date. The Budget explainer states that there is no impact until gains are realised.

This creates several investor categories:

• Existing investors with properties held before Budget night
• Investors buying established property after Budget night
• Investors buying eligible new-build property
• Investors holding assets before and after 1 July 2027
• Investors buying through superannuation, trusts or other structures

Each category may be treated differently.

Accrue Insights

For existing investors, the important point is that grandfathering may preserve existing negative gearing arrangements until disposal. This may make existing investment properties important to review carefully rather than reacting quickly to headlines.

For new-build investors, the proposed rules provide a different pathway. New builds can continue to be negatively geared before and after 1 July 2027 under the proposed arrangements.

For Accrue, this reinforces the importance of timing, property category and due diligence. A post-Budget investor may need to compare new-build opportunities differently from established property opportunities. That comparison should be based on more than tax; it should include rental demand, supply, location, infrastructure and the client’s broader advice from licensed professionals.

6. SMSF Property Investing and Superannuation Funds

The Budget tax explainer states that the negative gearing changes will apply to individuals, partnerships, companies and most trusts. However, widely held trusts, such as most managed investment trusts, and superannuation funds, including SMSFs, will be excluded.
This may lead to renewed discussion about SMSF property investing.

However, SMSF property investing is a specialist area. It can involve borrowing rules, liquidity requirements, related-party rules, investment strategy documentation, diversification requirements and strict compliance obligations. It should not be treated as a general property decision.

A person should not set up or use an SMSF to buy property based only on a Budget headline. SMSF, financial, tax and legal advice should be obtained from appropriately licensed professionals.

Accrue Insights

For SMSF investors who already have an SMSF established, the important point is that superannuation funds, including SMSFs, are proposed to be excluded from the negative gearing changes. This may mean SMSF investors are treated differently under the proposed negative gearing changes, depending on their fund strategy and professional advice.

For new-build SMSF investors, there may be a combined property research opportunity: identifying property that fits the SMSF’s existing investment strategy while also assessing new-build supply, rental demand and long-term market fundamentals.

For Accrue, our role is clear and limited. We do not provide SMSF setup advice, financial advice, tax advice or legal advice. We assist with the property side only, including research, market selection, new-build sourcing, rental demand review and property due diligence. Where clients require lending, taxation, financial planning, SMSF or accounting support, we can introduce them to our network of qualified professionals.

7. Discretionary Trusts and Family Trusts

The Budget also proposes changes to discretionary trusts.

The official Budget tax reform page states that the Government will introduce a minimum tax of 30% on discretionary trusts from 1 July 2028, with some exceptions. The Budget explainer for discretionary trusts also states that the tax will be paid by the trustee, that beneficiaries will still declare their trust income, and that beneficiaries other than corporate beneficiaries will receive non-refundable credits for tax payable by the trustee.

The Budget materials also state that expanded rollover relief will be available for small businesses and others to support restructuring out of discretionary trusts.

For property investors, this may cause some people to review how assets are held.

However, ownership structure is not simply a property decision. It may involve taxation, asset protection, estate planning, borrowing capacity, succession planning and legal obligations.

For that reason, investors should not make trust-related decisions based on general information alone.

Accrue Insights

For existing property investors using trusts, one consideration is that proposed changes may create a reason to review ownership structures before any relevant commencement dates, subject to professional tax, legal, accounting and financial advice. Rushed decisions should be avoided.

For new-build investors, proposed trust-related changes may increase the importance of considering ownership structure early, before a purchase is made. This does not mean Accrue provides advice on ownership structures, trusts, tax or legal matters. It means property sourcing should be considered alongside appropriate professional advice.

For Accrue, the property conversation remains focused on the asset: location, rental demand, property type, supply profile, market fundamentals and long-term property considerations. Where clients require advice on current trusts, ownership structures, tax implications or legal matters, we can introduce them to our network of qualified professionals.

8. Housing Supply: The Bigger Policy Message

The Budget’s broader message is not only about tax. It is about housing supply.

The Budget tax explainer states that the reforms are intended to support investment in new housing supply, while the Budget overview states that negative gearing will be limited to new builds from 1 July 2027 to focus tax support on new supply.

This matters because Australia continues to face significant housing pressures, including population growth, rental shortages, construction delays, infrastructure constraints and affordability challenges.

The direction of the Budget suggests that future investor incentives may be more closely aligned with properties that add to supply rather than properties that simply transfer existing stock from one owner to another.

Accrue Insights

For new-build investors, this is an important policy signal. Eligible new-build property appears to sit at the centre of the Government’s preferred housing supply direction.

For existing investors, the important point is that existing housing remains part of the rental market, and grandfathering may protect current investment arrangements. Existing investors may also benefit from understanding how supply constraints, rental demand and market depth affect their current holdings.

For Accrue, the opportunity is to help clients identify where new housing supply is needed, where rental demand is genuine, and where new-build property may be supported by infrastructure, employment, affordability and long-term population trends.

9. What This Means for Property Investors

The proposed Federal Budget changes may create a more selective property investment environment.

Future investors may need to consider:

• Whether the property is new or established
• Whether it genuinely adds to housing supply
• Whether it was purchased before or after Budget night
• Whether losses can be used immediately or carried forward
• How future CGT may be calculated
• Whether the ownership structure requires professional review
• Whether the property makes sense beyond tax treatment

The strongest theme is that eligible new-build property may become more important, but it should still be assessed carefully.

A new property is not automatically a quality investment. Investors still need to consider rental demand, local supply, vacancy risk, infrastructure, employment drivers, affordability, construction quality, price and long-term resale appeal.

Property selection remains the foundation.

Accrue Insights

For new-build investors, the Budget may create a stronger reason to understand this category now. Eligible new-build property may retain negative gearing access and CGT method choice, which may be a meaningful distinction under the proposed rules.

For existing investors, the Budget may reinforce the value of reviewing current holdings, understanding grandfathering and avoiding reactive decisions.

For Accrue, this is exactly where research and experience matter. We help clients look beyond headlines and assess the property itself: the market, the location, the demand, the supply pipeline and the long-term fundamentals.

Final Thoughts

The 2026 Federal Budget has changed the property investment conversation.

The proposed rules may limit negative gearing for many future established property purchases, change how CGT is calculated, introduce new trust tax rules and create different pathways for existing investors, new-build investors and SMSF investors.

But the clearest property message is this: eligible new-build property is now central to the Budget’s investor and housing supply direction.

Eligible new builds may continue to access negative gearing and may provide investors with a choice between the existing 50% CGT discount and the new indexation/minimum-tax method. Existing investors may also benefit from grandfathering arrangements that protect properties held before Budget night.

The Budget does not remove the need for property investing education. It increases it.

Investors may need to ask better questions, understand the rules more carefully and place greater emphasis on research-led property selection.

At Accrue Real Estate, we help clients understand the property side of that equation: where the market is moving, where new-build opportunities may exist, and how property fundamentals can be assessed in a changing environment.

How Accrue Real Estate Helps

At Accrue Real Estate, we help clients understand the property side of investing.

The proposed Budget changes may make this more important, not less.

If future rules increasingly distinguish between new-build and established residential property, then investors may need more support understanding what they are buying, where they are buying, and how that property fits within the broader market.

Accrue specialises in researching and sourcing new-build investment property opportunities across Australia. We focus on:

• New-build property sourcing
• Market research
• Location selection
• Rental demand analysis
• Supply and infrastructure review
• Property due diligence
• Long-term market fundamentals
• SMSF property sourcing support, where the client already has an SMSF established and has obtained appropriate professional advice

We also help clients save time by narrowing the market and identifying opportunities that may not be obvious to the broader public. Where available, this may include selected opportunities or negotiated terms that are not always broadly available to the general public.

We do not provide financial, taxation, legal, SMSF or lending advice. Where those areas arise, clients should seek advice from appropriately licensed professionals.