The 2026 budget introduced three tax changes that affect property investors differently depending on what you own, when you bought it, and what you're planning to do next. Here's how to work through your own position.

The changes to negative gearing, capital gains tax and discretionary trusts have been covered widely in the media. Most of that coverage has focused on the market in general. This article focuses on how to think through what the changes mean for what you already own, what you're planning to buy, and whether your current strategy still holds up.

Three changes, three different questions they raise

The budget introduced three separate tax changes. They affect investors differently and kick in at different times.

Negative gearing, from 1 July 2027: losses on new established property purchases can only be offset against residential property income or future capital gains from residential property. Excess losses carry forward to future years. Properties purchased before Budget night keep their current treatment.

Capital gains tax, from 1 July 2027: the 50% discount is replaced by an inflation-adjusted model with a 30% minimum tax on gains accruing after that date. Gains built up before 1 July 2027 still fall under the 50% discount calculation. New build purchasers can choose between the two methods at the time of sale.

Discretionary trusts, from 1 July 2028: a 30% minimum tax applies to trust income, with rollover relief available for investors who restructure out of a trust before then. There's no broad grandfathering so if you hold property in a discretionary trust, this needs attention before 2028.

Each change raises a different question depending on where you're sitting.

If you already own property

The first question is whether your existing asset is grandfathered, and what that covers.

Grandfathering applies to the negative gearing treatment on properties held before Budget night. Future purchases, refinancing, equity draws, and sales all operate under the new settings from that point forward.

For a property already running an annual rental loss, the monthly carrying cost stays the same. The tax relief timing shifts. Under the current rules, a $10,000 rental loss reduces your wage tax bill that year. For new established property purchases after the cut-off, that $10,000 carries forward and gets applied against future residential property income or capital gains, the relief arrives later, over time.

For existing grandfathered properties, the question is: does the cash flow gap stay manageable over the next two to three years as rates and rents move? And is this asset still the right one to hold relative to the equity you've built and what you could do with it?

If you're planning to buy

This is where the rules have shifted most for new purchases.

For established properties bought after the cut-off, rental losses won't reduce wage income in the same year. The property needs to be assessed on its own numbers: rental income, holding costs, yield, and expected growth in that specific market.

Before committing, these are the questions that to ask:

• Does the rental income cover a real portion of holding costs, or is the gap too wide to carry without short-term tax relief?

• Does the local market have the vacancy pressure and rental demand to support yield growth over time?

• Will this purchase support your borrowing capacity for the next move, or constrain it?

• Does the asset have the land value, scarcity, and owner-occupier demand that compound over time?

These have always been the right questions to ask. The budget increases the cost of skipping them.

The new build question

New builds retain access to negative gearing, which is driving a lot of attention toward them right now. The tax treatment is genuinely more favourable for investors who need the annual offset to make holding costs manageable.

The investment case for any new build still needs to be assessed on full fundamentals. Construction timelines of two to three years mean capital is committed while growth in that specific market is still developing. An established market with existing infrastructure, employment, and rental demand compounds through that same period. Equity drawn from a growing established asset carries no tax at draw-down, which supports buying again sooner.

Some new build markets do stack up on fundamentals. The assessment should cover land value, local economy, rental demand, and growth trajectory alongside the tax treatment.

The CGT timing question

For investors with properties that have grown substantially, the CGT changes have more bearing on exit planning than on the hold decision itself.

Gains accrued before 1 July 2027 still fall under the 50% discount calculation. From that date, gains accrue under the new indexed model with a 30% minimum tax rate on the profit. For investors holding properties with large unrealised gains who've been weighing a sale, the timing of that decision now carries a material tax difference depending on which side of July 2027 the gains land.

CGT sits inside a broader portfolio calculation that includes whether to keep holding, draw equity to buy again, or restructure, alongside cash flow, borrowing headroom, asset quality, and what the portfolio needs to do next. A sale decision rarely sits in isolation from those factors.

The tax triggered on a sale, the equity it releases, where that equity gets redeployed, and what the borrowing position looks like afterward: those four factors together determine whether selling actually moves the portfolio forward.

The trust question

The discretionary trust change is the one most investors haven't fully worked through yet.

From 1 July 2028, a 30% minimum tax applies to trust income with no broad grandfathering for existing structures. Rollover relief is available for investors who restructure before that date.

If you hold property inside a discretionary trust, review the structure with your accountant well before mid-2028. The rollover window exists so investors can restructure before the new minimum rate takes effect.

How TIA runs these assessments

At The Investors Agency, every purchase recommendation is assessed against the client's 30-year RoadMap which maps the timing, sequencing, and financial position of each property purchase across the full property portfolio plan. That includes serviceability at each stage, cash flow buffers, equity draw-down timing, and the holding costs of each asset under current and changing conditions.

Market selection runs through Crystal, TIA’s predictive market technology that scans 15,000 suburbs monthly across 178 indicators. Crystal identifies markets where rental demand, affordability, infrastructure, and scarcity conditions support long-term price growth - conditions that hold regardless of which tax rules are in place.

If the budget changes have raised questions about your current position or your next move, book a strategy session at theinvestorsagency.com.au.

Common Questions

Watch: Negative Gearing Is Gone for Established Property, What Now?

If you want to see the numbers worked through in full, Darren covers both changes in dollar terms in this episode including the $4,000 annual figure for a typical investor profile, the capital gains calculation against indexed value at sale, what's unchanged (super, equity, business structures), and his view on where established markets are heading while new supply is still two to three years from the ground.

Chapters

• 0:00 What the budget actually changed

• 2:00 Negative gearing - the cut-off date and what quarantined means

• 4:00 Capital gains tax - old structure vs new, calculated

• 6:00 What hasn't changed: super, equity, business structures

• 7:00 The $4,000 annual figure and how to weigh it

• 9:00 Established markets vs new builds - the numbers

• 12:00 Why supply inside established markets tightens while new stock is being built

• 14:00 Top-end investors and where that capital moves next