The negative gearing and capital gains tax reforms announced in the May 2026 Budget are now law. They take effect from 1 July 2027, which gives investors an unusually long runway to plan.
Three things most coverage gets wrong or leaves out:
We're mortgage brokers, not accountants, so nothing here is tax advice. What we can do is explain what changed and what it means for how a purchase gets financed.
The Australian Taxation Office sets it out plainly. The reforms restrict negative gearing for residential property investment to new builds, and replace the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains.
On timing and protection: properties held at announcement — 7:30pm AEST on 12 May 2026 — are exempt from the negative gearing changes, while the CGT reforms only apply to gains that accrue after 1 July 2027.
Both measures were enacted through the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026 — the same Act that changed SMSF borrowing.
The old system halved your nominal gain. The new one adjusts your cost base for inflation, then applies a minimum tax rate of 30% to what's left.
The practical consequence is that the two systems produce different answers depending on how long you hold and how fast the asset grows. On a high-growth asset held a short time, indexation shelters relatively little and the new rules are harsher. On a slow-growth asset held a long time, indexation can shelter a substantial share of the nominal gain, and the outcome can be closer than expected.
One timing detail worth knowing: for most sales, the CGT event is the date the contract is signed, not the date it settles. If you are near the boundary, that distinction matters, and it's a conversation for your accountant.
The row most people miss is the fourth one. The CGT changes are not limited to residential property — they apply across CGT assets held by individuals, trusts and partnerships. If you hold shares or an ETF portfolio alongside your property, this reform reaches them too.
Once you see that new builds keep negative gearing and attract CGT carve-outs, the policy intent becomes obvious. The Government has built an explicit incentive toward new housing supply.
That's already showing up in behaviour. Property fund manager Oliver Hume reported the proportion of new-build sales to investors in Victoria rising above 40% for the first time since December 2024. Queensland's market has its own dynamics, but the direction of travel is the same.
Before treating new builds as the obvious answer, though, there are lending realities that don't appear in any tax analysis:
Whether a new build suits you is a question for your accountant and your own analysis. Whether it can be financed cleanly, and on what terms, is a question we can answer.
You're in a better position than the headlines suggest. Property held at 7:30pm on 12 May 2026 is exempt from the negative gearing changes, and that treatment continues while you hold it.
The CGT position is different — the new rules apply to gains accruing after 1 July 2027 regardless of when you bought. Gains that accrued before that date remain under the old treatment.
What this creates is a genuine reason to think carefully before selling. An established property bought before the cut-off carries negative gearing treatment that a replacement bought afterwards would not. That's an argument, though not a decisive one, for holding rather than reshuffling a portfolio.
Where we can help is the finance side of that decision: whether the existing loan is still competitive, whether releasing equity for a new build is workable, and what the repayment picture looks like across scenarios.
Here's the shift that will affect most investors regardless of what they buy.
For established property purchased after the cut-off, the tax offset that made a negative cash flow position sustainable is no longer there. A property costing $8,000 a year to hold used to be partly funded by the tax deduction. Increasingly, it just costs $8,000 a year.
That pushes rental yield and serviceability up the priority list, and it changes how a lender's assessment feels. Lenders already shade rental income when assessing — typically counting only a portion of expected rent — and apply the same 3 percentage point serviceability buffer they apply to owner-occupiers. A property that is negatively geared in cash terms consumes borrowing capacity for any future purchase.
Positively geared or neutrally geared properties look more attractive under the new settings than they did under the old ones. That's a strategy question for you and your accountant. The lending consequence — how each scenario affects what you can borrow next — is where we come in.
The same Act changed self-managed super fund borrowing. From 10 August 2026, a new limited recourse borrowing arrangement can only be used to acquire real property where that property is business real property — effectively closing off borrowing to buy residential investment property inside an SMSF.
Existing arrangements are grandfathered, binding contracts exchanged before 10 August are protected, and an SMSF can still buy residential property outright using the fund's own cash.
We covered this in more detail in our August market update. If it affects you, that's the place to start — and then a conversation with an SMSF specialist, because the lending, tax and superannuation requirements interact in ways that need proper advice.
Sentiment has clearly softened. Industry surveys conducted after the Budget reported a large majority of investors viewing residential investment property as less attractive, with around half saying they intended to hold existing investments and wait.
Treat those figures as directional rather than precise — survey respondents self-select, and people who feel strongly about a change are the ones who answer surveys about it.
What we'd observe more cautiously is that it remains early. The reforms don't commence until 1 July 2027. Some implementation detail is still being finalised. Anyone claiming to know how this reshapes the market over five years is guessing.
The most useful thing about these reforms is the timeline. You have until 1 July 2027, which is enough time to plan properly rather than react.
Sensible sequence: talk to your accountant about your tax position, since that's their work and not ours. Then talk to us about the lending side — what you can borrow, how different property types are treated by different lenders, and what the repayment picture looks like across the scenarios you're weighing.
Doing it in that order tends to save time. There's little point modelling a tax outcome for a purchase that can't be financed on terms that work.
We work across a panel of more than 45 lenders, and under the Best Interests Duty we're required to recommend what suits your circumstances.
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This article contains general information only and does not take into account your objectives, financial situation or needs. It is not tax, legal, superannuation or financial advice, and must not be relied on as such. Taxation outcomes depend entirely on individual circumstances and some implementation detail of these reforms is still being finalised. Speak with your accountant or a registered tax agent before making any decision. Information current as at 16/08/2026.
'We', 'us' and 'our' refer to McIntyre Finance (Credit Representative number 519302 is authorised under Australian Credit Licence Number 389328) and our related businesses.
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