The Federal Government has announced significant changes to negative gearing and capital gains tax (CGT) in the 2026-27 Budget. The reforms begin on 1 July 2027. Here's a simple breakdown of what's actually changing.
⚠️ Quick note: These are announced reforms starting 1 July 2027, not current law yet. This is general information only, not financial or tax advice. Always check with a registered tax agent or financial adviser about your own situation.
1. Negative Gearing Limited to New Builds
Right now, investors can use losses from a rental property to reduce the tax on their other income, like their salary. From 1 July 2027, that benefit will only apply to newly built properties.
If you buy an established (existing) property as an investment after 12 May 2026, you'll only be able to offset those losses against income from other properties — not your wages. Any unused losses can be carried forward to future years.
Important: If you already own a negatively geared property bought before 7:30pm on 12 May 2026, nothing changes for you — you're grandfathered in and can keep negatively gearing it until you sell.
2. The 50% CGT Discount Is Being Replaced
Since 1999, anyone selling an asset held over 12 months got a flat 50% discount on their taxable capital gain. That's being replaced with two things:
- Cost base indexation — your gain is adjusted for inflation (CPI) instead of getting a flat 50% cut
- A 30% minimum tax rate on real capital gains
This applies to gains that build up after 1 July 2027. Gains before that date are still calculated under the current 50% discount rules.
3. Your Own Home Is Still Completely Exempt
This is the big one for most Australians: your main residence remains 100% CGT-free. None of these changes touch the home you live in. If anything, the reforms make paying off your own home an even smarter financial move compared to property investing.
What This Means for Everyday Homeowners
If you're focused on paying off the home you live in — which is what this site is all about — these reforms are largely good news:
- Your home stays CGT-exempt no matter what
- Reduced investor competition may slow house price growth slightly, which helps first home buyers
- The maths increasingly favours putting spare cash into your offset account rather than chasing investment property tax breaks
We covered the broader question of investing versus paying down your loan in our guide on paying off your mortgage vs investing — and these reforms only strengthen the case for prioritising your own home.
The Bottom Line
If you own or are buying a home to live in, the smartest tax-free "return" available to you is still reducing the interest on your own mortgage. Every dollar in your offset account effectively earns your mortgage rate, completely tax-free — no CGT, no negative gearing complexity.
Want to see how much faster you could be mortgage-free? Try our free offset calculator or repayment calculator.
See your mortgage-free date
Use the Offset Calculator →Source: Australian Government Budget 2026-27, "Negative Gearing and Capital Gains Tax Reform". Figures and dates are based on the announced policy and may change as legislation is finalised.