The 2026 Federal Budget: What It Means for Property Investors & First Home Buyers
Budget night dropped last night and the Treasurer called it "the most significant tax reform package in more than a quarter of a century." If you own investment property, are thinking about buying, or are trying to get into your first home — this affects you. Here's exactly what changed, what stayed the same, and what it means for your situation.
💰 CAPITAL GAINS TAXChanges from 1 July 2027
Before: When you sold an investment property held for 12+ months, you only paid tax on 50% of your profit. The other half was automatically tax-free.
Now: The 50% discount is gone. Your gain is adjusted for inflation (CPI). You pay tax only on the real growth above inflation. A minimum 30% tax rate applies to that gain.
Example: You bought a property for $500,000 and sold it for $800,000. Inflation accounts for $50,000 of the rise. Your taxable gain = $250,000 (not $300,000). You pay at least 30% on that — roughly $75,000 in tax compared to about $67,000 under the old rules.
✅ Gains already built up before July 2027 still keep the 50% discount ✅ New builds: you can choose whichever method is better for you ✅ Properties you already own: fully protected
🏠 NEGATIVE GEARINGChanges from 1 July 2027
Before: If your investment property cost more to hold than it earned in rent, you could deduct that loss against your salary — reducing your income tax bill each year.
Now: If you buy an established property after 12 May 2026, those losses can no longer offset your salary. They carry forward in a holding bucket and can only be used against future rental income or capital gains when you sell.
Example: Your investment property runs at a $6,000/year loss. You earn $150,000. Old rules: your taxable income drops to $144,000 — saving around $2,580 in tax. New rules: that $6,000 loss sits in a holding bucket until you earn rental profit or sell the property.
✅ Properties you already own: nothing changes ✅ New builds bought after Budget night: full negative gearing retained ❌ Established properties bought after 12 May 2026: losses cannot offset your salary
🏦 DISCRETIONARY TRUSTSChanges from 1 July 2028
Before: Trust income could be distributed to a family member on a lower tax bracket — paying 19% instead of 45%. Legal and widely used.
Now: A minimum 30% tax applies to all trust distributions — no matter how low the recipient's income is. Income splitting below 30% is no longer possible.
Example: Your trust earns $100,000. You distribute to an adult child who earns very little. Old tax: approximately $5,700. New tax: $9,000 minimum. The tax benefit of income splitting is significantly reduced.
✅ 3-year rollover window from July 2027 if you want to restructure
🏡 FIRST HOME BUYERS — WHAT'S IN IT FOR YOU
While the headlines have focused on investor changes, there is genuinely good news for first home buyers.
5% Deposit Scheme (First Home Guarantee) Already running with no income caps and no place limits. The government guarantees up to 15% of your loan so you can buy with just 5% down without paying Lenders Mortgage Insurance (LMI). Potential saving: $17,000–$25,000.
Help to Buy — Shared Equity Scheme The government co-buys up to 40% of a new home with you (or 30% of an existing home). You need just a 2% deposit and a much smaller loan. You buy back their share over time. Available now in most states.
100,000 New Homes for First Buyers $10 billion committed to build homes sold exclusively to first home buyers at below-market prices. Construction begins 2026–27.
$47 Billion Housing Investment Total federal housing investment lifted to a record $47 billion, including $2 billion for infrastructure to unlock new housing developments.
Foreign Buyer Ban Extended The ban on foreign investors purchasing existing homes has been extended — reducing competition on established housing stock for Australian buyers.
First Home Super Saver Scheme Save for your deposit inside super at a lower tax rate. Withdraw up to $50,000 of voluntary contributions specifically for your first home deposit.
The bottom line for existing investors: Your current properties are protected. Nothing changes on what you already own.
The strategy for everything you buy next just changed. New builds are being favoured. The tax incentives have shifted. And how you structure future purchases matters more now than ever.
Not sure what this means for YOUR situation specifically?
That's exactly what Naviyo is here for. We connect you with the right property expert who can look at your specific portfolio, your goals, and give you a straight answer. No generic advice. No guesswork. Just clarity.
This post is general information only and does not constitute financial, legal or tax advice. Everyone's situation is different - please speak with a qualified financial adviser or accountant before making any decisions. Information is based on the 2026–27 Federal Budget announcements and is subject to legislative change.
