Federal Budget 2026 — negative gearing and CGT changes confirmed: what Brisbane investors need to know
Negative gearing restricted to new builds. CGT discount replaced with inflation indexation. Both changes effective 1 July 2027.
Treasurer Jim Chalmers confirmed the changes tonight, describing them as the most ambitious tax reforms in 26 years. Critically — all properties owned before 7:30pm AEST tonight are fully grandfathered. The changes apply to established properties purchased after budget night and are effective from 1 July 2027.
Tonight’s federal budget confirmed the two biggest changes to Australian property investment tax in nearly three decades. Negative gearing on established residential property is being restricted to new builds from 1 July 2027. The 50% CGT discount is being replaced with inflation indexation and a minimum 30% tax from the same date. Here is the complete guide to what was announced, who is affected, and what it means for Brisbane investors.
After months of speculation, leaks, and political debate stretching back to Labor’s 2019 election policy, the Albanese government has confirmed the changes. Despite promising before the 2025 election not to touch negative gearing or CGT, Treasurer Jim Chalmers framed tonight’s announcement as a necessary response to housing affordability and intergenerational equity — describing the status quo as “unfair and unacceptable.”
This article covers only what was confirmed in the budget tonight. It is a factual guide to the confirmed changes, the exact timeline, who is affected, and what the practical implications are for investors in Brisbane and Southeast Queensland. For the analysis of how these changes affect the Brisbane property market specifically, read our market outlook update.
The two confirmed changes — exactly what was announced
Negative gearing restricted to new residential builds
From 1 July 2027, investors will only be able to deduct losses from established residential property against rental income or capital gains from that same property — not against other income such as wages. This is the core change to negative gearing as it has operated since the 1980s.
Losses that cannot be deducted in the current year may be carried forward and offset against future rental income or capital gains from the property — they are not permanently lost.
50% CGT discount replaced with inflation indexation and 30% minimum tax
From 1 July 2027, the 50% CGT discount — which has applied to assets held for more than 12 months since 1999 — will be replaced for gains arising after that date. The new system uses inflation indexation, meaning investors only pay tax on the real gain above inflation rather than a flat 50% discount on the nominal gain.
A new minimum 30% tax rate on capital gains will also apply from 1 July 2027. The government’s stated rationale is that this aligns the effective tax rate on real capital gains with the marginal rate faced by average workers.
The exact timeline — what changes when
12 May 2026
Budget cut-off time. All properties owned before this moment are fully grandfathered for both negative gearing and CGT purposes. No action required for existing investors — nothing changes for properties already held.
to 30 June 2027
Transition period. Investors who buy established residential property after budget night can still deduct losses against residential property income — just not against wages or other income. Not ideal but not the full restriction either. New builds remain fully negative gearable against all income.
Full implementation. Negative gearing on established property (purchased after budget night) is restricted to property income and gains only. Losses carry forward. The 50% CGT discount is replaced with inflation indexation for gains arising after this date. The 30% minimum CGT tax begins.
Trust changes begin. A separate measure introduces a minimum 30% tax on discretionary trust distributions from this date, with some exemptions for primary production, small businesses, and certain vulnerable minors.
Who is affected — and who is not
How the CGT change works in practice — a real example
The shift from a flat 50% discount to inflation indexation is the most technically complex change. Here is how it works using a real Brisbane investment property example to illustrate the difference between the old and new system.
Old system (50% discount)
New system (indexation + 30% min)
This example uses an estimated CPI of 3% per annum over 10 years and a 39% marginal rate for the old system comparison. Actual outcomes will depend on real inflation rates, the investor’s marginal tax rate, and the final legislative design of the indexation method. For high-inflation periods the new system may produce lower tax than the old 50% discount — the outcome varies by holding period and inflation rate. Always confirm with a registered tax agent.
The government’s own analysis noted that 83% of the benefit of the current CGT discount goes to the top 10% of taxpayers by income. The new inflation indexation system is designed so that investors with lower real gains pay less tax than under the old 50% flat discount, while those with gains significantly above inflation pay more. For long-term Brisbane property holders where growth has substantially outpaced inflation, the new system will generally produce a higher tax bill on sale than the old 50% discount did.
The negative gearing change — what ring-fencing actually means
The term ring-fencing describes what happens to negative gearing losses under the new rules. For established properties purchased after budget night, losses from that property can only be deducted against income from that same property — rent received and eventually capital gains on sale. They cannot be deducted against salary, wages, or other income.
Losses that exceed property income in a given year are carried forward — they are not permanently lost. They accumulate and can be applied against future rental income or against the capital gain when the property is eventually sold. In practical terms, an investor who is $8,000 per year negatively geared on an established property purchased after budget night will not receive the immediate tax refund against wages that negative gearing has historically provided. Instead that $8,000 loss accumulates over the years and reduces their eventual CGT bill on sale.
If you purchase an established residential property after 7:30pm AEST 12 May 2026 and before 1 July 2027, you enter a transition period. During this window you can still deduct losses against residential property income — just not wages. From 1 July 2027 you move to full ring-fencing. This means investors who settle purchases between now and June 2027 have approximately 13 months of partial deductibility before the full restriction kicks in. New builds purchased at any point after budget night retain full negative gearing against all income indefinitely.
The impact on Brisbane’s property market — what the data says
The immediate question for Brisbane investors is what these changes mean for property values. Independent economic modelling commissioned before the budget estimated the CGT changes alone could see housing prices approximately 1.4% lower than they otherwise would have been. The addition of negative gearing restrictions could add a further 2% downward pressure on established property prices — primarily through reduced investor demand.
It is important to put those numbers in context. Brisbane’s established property market has risen 19.7% in the year to April 2026. A potential 3.4% moderation in price growth from reduced investor demand does not constitute a market crash — it represents a partial offset against growth that is already occurring at near-record levels. The structural fundamentals that drive Brisbane’s market — population growth of 44,000 per year, vacancy at 0.8%, listings 13.7% below year-ago levels, and a housing construction shortfall of thousands of dwellings per year — are not altered by a tax change.
A Money.com.au survey conducted before the budget found 39% of property investors would either step back from buying or sell existing holdings if the CGT discount were reduced, with a further 22% saying they would take similar action if negative gearing were restricted. If those figures translate to actual market behaviour, reduced investor demand for established property could create more opportunity for owner-occupiers and first home buyers — and ironically, for investors who buy new builds where both tax concessions are preserved.
New residential builds are the clear winner from tonight’s changes. Investors who purchase new builds after budget night retain full negative gearing deductibility against all income indefinitely, and can choose between the 50% CGT discount or the new indexation method when they sell — whichever produces the better outcome. This is a significant tax advantage over established property for investors buying from today forward. Brisbane’s new build market — house and land packages in growth corridors, boutique apartment developments in established suburbs — has just become considerably more attractive on an after-tax basis relative to existing established housing.
What this means for different types of Brisbane investors
| Investor Type | Negative Gearing Impact | CGT Impact | Net Assessment |
|---|---|---|---|
| Own established property before 12 May 2026 | None — fully grandfathered | Gains before 1 July 2027 protected | Not affected — hold as planned |
| Buying established property after budget night | Ring-fenced from 1 July 2027 | New CGT rules apply to gains after 1 July 2027 | Significant — review strategy |
| Buying new residential build | Fully exempt — retain NG | Can choose 50% discount or indexation | Advantaged — new builds favoured |
| SMSF property investors | Not affected | CGT discount in super unchanged | No material change |
| Investors in commercial property | Not affected | CGT changes apply to commercial gains after 1 July 2027 | Partial impact on exit tax only |
| Share investors | N/A | CGT changes apply to shares after 1 July 2027 | Review share portfolio tax strategy |
Three things Brisbane investors should do this week
The budget has been handed down. The changes are confirmed. The question now is what action to take based on your specific situation.
If you own Brisbane investment property purchased before tonight, the answer is straightforward — nothing needs to change. Your property is grandfathered and the rules that applied when you bought it continue to apply for as long as you hold it. There is no urgency to sell, restructure, or refinance in response to tonight’s announcement. Any decision to sell should be based on your investment strategy and market conditions, not a tax change that does not apply to you.
If you were planning to buy an established Brisbane investment property in the coming months, tonight changes your strategy in a meaningful way. The comparison between established property and new builds has shifted significantly in favour of new builds on an after-tax basis. A new house and land package in Ipswich, a new apartment development in Woolloongabba, or a new townhouse in Chermside now carries meaningfully better tax treatment than an equivalent established property — both for ongoing negative gearing deductibility and for the CGT method choice on exit.
If you are planning to sell an established investment property, the timing question becomes relevant. Capital gains on gains arising before 1 July 2027 are still subject to the existing 50% CGT discount — so any gains crystallised before that date are protected under the old rules. For investors considering selling in 2026 or early 2027, there is a genuine tax incentive to settle before 1 July 2027 where the holding period and strategy allow.
Significant changes — but with important protections for existing investors
Tonight’s confirmed changes are the most significant reform to Australian property investment tax since 1999. The restriction of negative gearing to new builds and the replacement of the 50% CGT discount with inflation indexation will materially alter the after-tax return profile for investors buying established residential property from tonight forward. However, the grandfathering of all properties owned before 7:30pm tonight is a genuine and complete protection for existing investors — nothing changes for your current holdings. The biggest strategic shift is that new residential builds have just become significantly more tax-advantaged relative to established property for any investor buying from today forward. Brisbane’s new build market — from house and land packages in Ipswich and Logan to new apartment developments near Cross River Rail stations — deserves serious reconsideration for investors who had previously defaulted to established property. Get advice from both your accountant and your mortgage broker before your next purchase — the tax and finance picture has changed in a meaningful way tonight.
General information only. This article does not constitute financial, legal, or investment advice. Always consult a licensed financial adviser or mortgage broker before making investment decisions.
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