CGT and Negative Gearing Changes: What Is Now Law, What Is Still Coming, and What You Can Control

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Property & Investment Now Law: 25 June 2026

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed both houses of Parliament on 25 June 2026. The CGT discount changes and negative gearing restrictions are now law. Not proposed. Not promised. Law.

There has been more noise around these changes than almost any tax reform in recent memory. Some of it accurate. Some of it alarmist. Some of it describing proposed changes as if they were already in effect. This article tells you exactly what is law, what is still being legislated, what is not affected at all, and what the right professionals to speak to are if these changes affect your situation.

My message is straightforward: focus only on what you can control. Tax law has always changed. It will change again. The investors and property owners who do well over the long term are the ones who make decisions based on solid strategy, current advice, and a clear understanding of their own position, not based on fear or urgency created by media coverage of changes that may not even affect them.

What Is Now Law, What Is Coming, and What Is Not Affected

NOW LAW
Negative gearing restricted for new established residential property purchases
Applies to residential properties acquired after 7:30pm AEST 12 May 2026. From 1 July 2027, net rental losses can only be offset against residential property income, not wages or other income.
From 1 July 2027
NOW LAW
50% CGT discount replaced with indexation and 30% minimum tax
Applies to all CGT assets held by individuals, trusts and partnerships. Gains accruing from 1 July 2027 will be subject to cost base indexation (CPI) and a 30% minimum tax instead of the 50% discount.
From 1 July 2027
SECOND BILL
Minimum 30% tax on discretionary trusts
Announced but detailed legislation still to come. A second, more technical bill will spell out the detailed rules including carve-outs and updated rules for discretionary trusts. Not yet in the passed legislation.
From 1 July 2028
CONSULTING
Innovative Business CGT Concession and small business carve-outs
The government announced on 18 June 2026 a range of small business carve-outs, including raising the turnover threshold for the small business active asset CGT concession from $2M to $10M, and an Innovative Business CGT Concession for start-ups. Consultation is underway. Not yet legislated.
Details TBC
SECOND BILL
Co-owner grandfathering fix
Properties jointly owned before 12 May 2026 where a co-owner dies or divorces could lose grandfathering under the current legislation. The government has committed to fixing this in a second round of legislation.
Later 2026
NOT AFFECTED
Commercial property, shares, and other non-residential assets
The negative gearing changes apply only to established residential property. Commercial property, shares, and other asset classes keep existing arrangements. The CGT discount changes apply broadly to all CGT assets, but the negative gearing quarantining does not extend to these classes.
No change

The Key Changes Explained Simply

Negative gearing: what actually changes
From 1 July 2027

Negative gearing exists when the costs of owning a rental property exceed the rental income it generates. Under the old rules, that net rental loss could be deducted against any income, including your salary and wages.

Under the new law, for residential properties acquired after 7:30pm AEST on 12 May 2026, that rental loss can only be offset against residential property income, including capital gains from residential property, and can be carried forward to future years if it cannot be used in the current year.

This does not apply to new residential builds, which remain fully negatively gearable. Commercial property is not affected. Shares are not affected.

Example: An investor buys an established residential investment property in August 2026 and the property runs at a $15,000 annual loss. Under the old rules, that loss could reduce their salary income and therefore their income tax. Under the new rules from 1 July 2027, the $15,000 loss can only be offset against other residential property income. If they have none, the loss is carried forward to a future year.
CGT discount: what actually changes
Gains accruing from 1 July 2027

The current 50% CGT discount, which halves the taxable capital gain on assets held for more than 12 months, is replaced for individuals, trusts, and partnerships with two mechanisms: cost base indexation using CPI, and a 30% minimum tax on net capital gains.

Cost base indexation means only real, inflation-adjusted gains are taxed. If your asset grew in value at the same rate as inflation, there would be little or no taxable gain. If it grew faster than inflation, the excess is the taxable portion.

The 30% minimum tax ensures that even where indexation produces a small taxable gain, at least 30% of that gain is captured as tax. For high-income earners the effective tax rate on capital gains under the old 50% discount depended on their marginal rate. The new regime’s outcome will depend on the growth rate of the asset, the inflation rate over the holding period, and the taxpayer’s marginal rate. Your accountant can model the specific impact for your situation.

This applies to gains accruing after 1 July 2027, not to the full gain on assets held before that date. Assets already owned retain the 50% discount for gains built up before 1 July 2027.

What does not change: The main residence CGT exemption is unchanged. Superannuation funds keep their existing one-third CGT discount and are not subject to the new rules. Companies are not affected. Investors in new residential builds can choose between the 50% discount or the new indexation approach.
Discretionary trusts: minimum 30% tax
From 1 July 2028 second bill not yet passed

The government has announced a minimum tax of 30% on discretionary trusts from 1 July 2028. The detail of how this will work, including exactly which trusts are captured, what the carve-outs are, and how it interacts with the CGT changes, is subject to a second, more technical piece of legislation that has not yet been introduced.

If you have a discretionary trust that holds investment assets or distributes income to family members, this is the area where you should be having a detailed conversation with your accountant and legal adviser now. The framework is announced. The detail is not yet law. That gap creates uncertainty that professional advice can help you navigate.

Rollover relief will be provided for three years from 1 July 2027 to assist small businesses and others who wish to restructure before the changes fully take effect.

Do not act in panic. The trust changes are not yet law in detail. Making significant structural decisions before the full legislation is published carries risk. Get professional advice on your specific structure before moving anything.

What Is Not Affected: The Things Worth Repeating Clearly

Not affected by negative gearing changes
Properties bought before 12 May 2026
New residential builds
Commercial property of any kind
Shares and other investment assets
Affordable housing investments
Widely held unit trusts and managed investment trusts
Not affected by CGT changes
Main residence exemption completely unchanged
Superannuation funds retain existing one-third discount
Companies no change to CGT treatment
Gains accrued before 1 July 2027 on existing assets
New residential builds investor can choose 50% or new method
Income support recipients exempt from minimum tax

The Grandfathering Rules: Your Existing Properties

If you already own investment property
Negative gearing

If you owned a residential property before 7:30pm AEST on 12 May 2026, nothing changes. You can continue to negatively gear it as before, deducting rental losses against any income. The new rules only apply to properties acquired after that time.

CGT discount

For assets you already own, the 50% CGT discount continues to apply to gains that accrued up to 1 July 2027. Only gains accruing after that date are subject to the new indexation and minimum tax rules. If you sell after 1 July 2027, the gain will be split: old rules apply to the portion accrued before that date, new rules apply to the portion accrued after.

Joint ownership issue watch this space

If you co-own a property with another person and one owner dies or a relationship breaks down, there is a currently unresolved issue in the legislation that may cause the grandfathering protection to be lost. The government has committed to fixing this in a second bill. Do not make any decisions about jointly owned properties based on the current state of the legislation without specific legal advice.

Focus on What You Can Control

Tax law changes. It always has. It always will. The investors who do well over the long term are not the ones who time their decisions around the tax rules in effect at any given moment. They are the ones who make decisions based on the quality of the asset, the strength of the strategy, and professional advice calibrated to their specific circumstances.

The changes announced are significant. They are also structured, transitional, and subject to a number of exemptions and carve-outs that will not be fully known until the second round of legislation is published. That context matters.

What you can control right now is the quality of the advice you seek, the clarity of your own investment strategy, and whether you are making decisions based on your individual financial position or based on what you read in a headline.

There are three conversations worth having before you make any decision to buy, sell, or restructure because of these changes.

📊
Your Accountant
Before selling or buying any property, or considering restructuring a trust or other entity, talk to your accountant first. They can model the CGT impact on your specific assets, advise on whether the new rules or the old rules produce a better outcome for a new build investment, and tell you how the trust changes are likely to affect your structure once the second bill is published.
🏠
A Specialist Buyers Agent
If you are considering buying residential or commercial property, a specialist buyers agent who understands both markets can help you identify assets that align with your short, medium, and long-term investment strategy, factoring in the new rules. New residential builds are specifically exempt from the negative gearing changes and may represent a different opportunity than they did before.
💼
A Financial Adviser
A licensed financial adviser can help you build or review your long-term wealth plan in the context of these tax changes. The shift from the 50% CGT discount to indexation and the minimum tax changes the after-tax return profile of different asset classes. Your overall strategy, including how property, shares, super, and other assets work together, may need to be reviewed with a fresh set of numbers.

I am a commercial finance broker. My role in this conversation is to help you understand the lending implications of these changes and to make sure the finance you use to build wealth is structured correctly. The tax advice, the investment strategy, and the structural decisions belong with qualified accountants, financial advisers, and buyers agents who specialise in these areas. That referral is not me stepping back from the conversation. It is me making sure you get the right answer from the right person.

What This Means for Lending and Finance Decisions

From a finance perspective, these changes have a few practical implications worth noting.

If you are considering selling an investment property that you have held for several years, the transitional CGT rules mean the timing of a sale relative to 1 July 2027 matters. Assets sold before that date have all gains subject to the old 50% discount. Assets sold after that date have gains split between the two regimes. Your accountant can run the numbers. Your broker can help you understand what the finance looks like if you are using sale proceeds to redeploy into another asset.

If you are considering buying a new residential build rather than an established property, the negative gearing exemption for new builds may change the lending strategy. New builds can still be fully negatively geared. The financing of off-the-plan or construction-stage property has specific characteristics that differ from established property finance and a broker who understands both can help you structure it correctly.

If you have a discretionary trust that holds investment assets, do not restructure anything until the second bill is published and your accountant has reviewed your specific position. Rollover relief is available from 1 July 2027 for three years, which provides time to restructure thoughtfully rather than reactively.


Frequently Asked Questions

Does the negative gearing change affect properties I already own?

No. Properties you owned before 7:30pm AEST on 12 May 2026 are grandfathered. You can continue to negatively gear them under the existing rules, deducting rental losses against any income including wages. The restrictions only apply to established residential properties acquired after that date and from 1 July 2027 when the changes commence.

Are new residential builds still negatively gearable?

Yes. New residential builds are exempt from the negative gearing quarantining. If you invest in a new build, you can continue to deduct rental losses against other income under the existing rules. This is a significant point that may shift investor preference toward new supply, which was part of the policy intent of these changes.

Does the 50% CGT discount change affect my main residence?

No. The main residence CGT exemption is completely unchanged. When you sell a property that has been your primary place of residence, the full exemption continues to apply as before. This was one of the most commonly misreported aspects of the changes.

I hold investment properties in a trust. What should I do?

Speak to your accountant before doing anything. The CGT changes apply to trusts from 1 July 2027. The discretionary trust minimum tax is proposed for 1 July 2028 but the detailed legislation has not yet been introduced. Rollover relief is available to assist with restructuring and runs for three years from 1 July 2027. Making structural changes before the full legislation is published carries the risk of optimising for a rule set that may change before it takes effect.

Does commercial property investing change under these rules?

The negative gearing changes do not apply to commercial property. Commercial property investors can continue to deduct net rental losses against any income under existing arrangements. The CGT discount changes do apply to commercial property held by individuals, trusts, and partnerships as they apply to all CGT assets. A licensed financial adviser and your accountant can model how this affects the after-tax return profile of commercial property investment for your specific situation.

Thinking about how these changes affect your property finance strategy?

I can help you understand the lending side of the picture. For tax advice, investment strategy, and structure decisions, I will connect you with the right professionals for each part of the conversation.

Book a Free Strategy Call Commercial Finance Services
References and Further Reading

The information in this article is based on the following publicly available sources. Readers are encouraged to review these directly, particularly as a second tranche of legislation covering trust rules and small business carve-outs is yet to be introduced.

ATO: Tax reform : Boosting home ownership : Reforming negative gearing and capital gains tax
Official ATO summary of the announced changes, including commencement dates and scope of each measure.
ato.gov.au : Tax reform: negative gearing and CGT
Australian Government Budget 2026-27: Tax reform measures
The Budget paper covering the full suite of tax reforms including negative gearing, CGT, and instant asset write-off changes.
budget.gov.au/content/04-tax-reform.htm
Budget Tax Explainer: Negative Gearing and Capital Gains Tax Reform (PDF)
Treasury’s worked examples of how the new CGT rules apply to specific investor scenarios, including grandfathering.
budget.gov.au : CGT explainer PDF
Corrs Chambers Westgarth: Capital gains tax and negative gearing amendments : key changes and implications
A detailed legal analysis of the bill’s provisions, including the trust rules and compliance complexity introduced by the legislation.
corrs.com.au : CGT and negative gearing amendments
Baker McKenzie: Australia Budget Bites : CGT Discount and Negative Gearing
An analysis of the scope of the changes, including which investors and asset classes are and are not affected.
bakermckenzie.com : CGT discount and negative gearing
Parliament of Australia: Treasury Laws Amendment (Tax Reform No.1) Bill 2026
The bill digest and legislative record for the bill that passed both houses of Parliament on 25 June 2026.
aph.gov.au : Tax Reform No.1 Bill 2026
This article has been prepared by Yasmine Shah, Authorised Credit Representative (No. 540047) of QED Credit Services Pty Ltd (ACL 387856), trading as Impact Brokers (ABN 12 601 144 932). It contains general information only and does not constitute financial, tax, legal, or investment advice. Information about CGT and negative gearing changes is based on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 as passed on 25 June 2026 and associated Budget documentation. A second tranche of legislation covering discretionary trust rules and other detailed carve-outs has not yet been introduced. Tax law is complex and the impact of these changes depends entirely on your individual circumstances. Before making any decision to buy, sell, or restructure assets as a result of these changes, consult a qualified accountant, financial adviser, and where relevant a commercial lawyer with appropriate expertise.

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