Australian household wealth hit a record $19.2 trillion in the March quarter, with households adding $31.1 billion to superannuation and $21.5 billion to deposits in just three months. That’s a lot of money moving into savings and investments. But the 2026–27 Federal Budget is about to shake up how those savings work — especially if you own property or plan to sell investments. Here’s what you actually need to know.
Disclosure: Some links on this page are affiliate links. If you make a purchase through them, Britwealth may earn a commission at no extra cost to you. We only include products and services that are relevant to the topic.
This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The Budget lands at a tricky moment. Inflation is still a concern, the Iran conflict is adding uncertainty, and the government is trying to balance cost-of-living relief with fiscal discipline. Net debt is expected to hit $767.8 billion by 2029–30. That context matters because the tax changes coming down the track — on capital gains, negative gearing, and trusts — are designed to raise revenue, not just simplify things. Understanding how they work now could save you thousands later.
I’ve been watching how these policies interact with everyday financial savings strategies, and the picture is more layered than most headlines suggest.
The central concept here is negative gearing — when the costs of owning an investment property (interest, maintenance, fees) exceed the rental income, and you deduct that loss against your other income like salary. It’s been a staple of Australian property investing for decades. The Budget changes don’t ban it entirely, but they redirect it toward new housing only. That’s a big shift.
What I’d flag straight away: if you’re already negatively gearing an established property, nothing changes until you sell. But if you’re planning to buy an investment property after Budget night, the rules are different depending on whether it’s new or existing stock.
What the negative gearing overhaul means for property investors
The headline change is straightforward: negative gearing on established investment properties purchased from Budget night will be abolished, with the new regime starting July 1, 2027. Excess losses can still be carried forward and offset against residential property income in future years — you just can’t use them to reduce your salary tax bill.
Newly constructed investment properties are exempt. So are build-to-rent developments and affordable housing programs. The government’s logic is that this will boost housing supply rather than just inflating prices on existing homes.
The Budget forecasts these changes will limit house price growth by 2% and deliver a saving of $19,000 on the purchase of a median-priced home, enabling 75,000 Australians to achieve home ownership. Those are big claims, and they depend on how investors actually behave. If investors shift toward new builds, that could help supply. If they pull back entirely, rents could rise faster.
Existing investors can continue claiming negative gearing concessions until they sell their properties. That creates a potential lock-in effect — hold onto a property long enough and the tax treatment stays favourable, but sell and you lose that benefit permanently. For anyone sitting on an established investment property, the decision to sell or hold just got more consequential.
If you’re unsure how these changes affect your specific situation, getting tailored guidance makes sense. A service like JustAnswer Finance can connect you with tax and investment professionals who work through the numbers case by case.
Capital gains tax overhaul: the 50% discount disappears
The 50% CGT discount on assets held for 12 months or more will be scrapped from July 1, 2027. In its place comes an inflation-index approach that taxes real gains over the asset’s holding period. That means you only pay tax on gains above inflation, not the whole nominal profit.
On top of that, a 30% minimum tax on net capital gains will apply to all CGT assets, including pre-1985 assets held by individuals, trusts, and partnerships. Pre-1985 assets have historically been exempt from CGT entirely, so this is a significant expansion of the tax base.
Here’s how the two approaches compare in practice:
→ Scroll right to see all columns
| Feature | Current system (until June 30, 2027) | New system (from July 1, 2027) |
|---|---|---|
| Holding period discount | 50% discount on gains if held 12+ months | No discount — inflation index applied instead |
| Pre-1985 assets | Generally exempt from CGT | Subject to 30% minimum tax on net gains |
| Tax on real vs nominal gains | Taxed on nominal gain (no inflation adjustment) | Taxed on real gain above inflation |
| Minimum tax rate | None | 30% on net capital gains |
The inflation-index approach sounds fairer in theory — you’re only taxed on genuine profit above inflation. But it adds complexity. You’ll need to track the Consumer Price Index over your entire holding period and calculate the indexed cost base. For assets held 20 or 30 years, that’s a lot of historical data to dig up.
For anyone planning to sell a significant asset after mid-2027, the tax bill could be substantially higher than under the current rules. The 30% minimum tax also catches assets that were previously outside the system entirely, like family heirlooms or land held since the 1970s.
Three common mistakes investors make with the new rules
Assuming negative gearing is gone completely
It’s not. Negative gearing on newly constructed properties, build-to-rent, and affordable housing continues. The mistake is thinking the strategy is dead. It’s just redirected. If you’re looking at investment property, new builds now have a tax advantage over established homes that didn’t exist before. That could shift where smart money goes.
Ignoring the 30% minimum tax on pre-1985 assets
Families holding land or shares acquired before 1985 have never had to think about CGT on those assets. That changes from July 1, 2027. A 30% minimum tax applies to net gains. If you’re in that position, the window to sell under the old rules closes in mid-2027. Waiting could mean a tax bill you never expected.
Thinking the $250 tax offset is a game-changer
It’s not nothing — 13.3 million workers will get it annually from 2027–28, and it raises the tax-free threshold to $19,985. But CPA Australia notes it’s well below the projected revenue from the CGT and negative gearing changes, which are estimated to raise almost $7 billion in 2029–30. The offset is a modest sweetener, not a wealth-building tool. Don’t restructure your finances around it.
If you’re dealing with complex asset structures or family trusts, the trust taxation changes add another layer. A service like JustAnswer Business Law can help clarify how these rules apply to your specific setup without committing to a full accounting engagement.
Practical steps to adjust your savings and investment strategy
Review your property portfolio before July 2027
If you own an established investment property that’s negatively geared, you have until you sell to keep claiming those deductions. But the decision to sell becomes a tax event. Work out the numbers now: what’s the after-tax position if you hold versus sell before the new rules fully embed? The 2% forecast cap on house price growth also matters — if capital growth slows, the maths of holding changes.
Understand how the inflation index affects your CGT calculation
For assets you plan to hold beyond June 2027, the new system taxes real gains, not nominal ones. That’s better for long-term holders in high-inflation periods, but worse if inflation is low. You’ll need to keep CPI records for every year you hold the asset. A simple spreadsheet tracking annual indexation factors will save headaches later.
Redirect savings toward superannuation and deposits
The ABS data shows Australians are already doing this — $31.1 billion into super and $21.5 billion into deposits in one quarter. With property tax advantages narrowing, those channels become relatively more attractive. Super offers concessional tax rates on contributions and earnings, while deposits give you liquidity and safety. Neither is flashy, but both are reliable.
For those who want to track their spending and find extra room in the budget, a simple budget planner notebook can help you see where money goes each week. Small leaks add up.
Consider the timing of any asset sales
The 50% CGT discount applies until June 30, 2027. If you’re sitting on a large capital gain and were planning to sell in the next few years, there’s a strong case to do it before that date. After that, the inflation index might reduce your taxable gain, but the 30% minimum tax floor means you can’t escape CGT entirely. Run the numbers both ways.
Frequently asked questions about the 2026–27 Budget changes
Can I still negatively gear if I buy an established property before Budget night? ▾
Does the 30% minimum tax apply to my family home? ▾
What happens to excess losses if I can’t negatively gear anymore? ▾
Will the $250 tax offset be indexed for inflation? ▾
How does the domestic gas reservation policy affect household bills? ▾
The Budget’s bigger picture: deficits, debt, and what comes next
After a deficit of $31.5 billion this year, the government forecasts deficits of $31.0 billion, $34.4 billion, and $25.3 billion in the years out to 2029–30. A surplus isn’t expected until 2036. Gross debt will hit $982 billion by the end of this financial year, with net debt reaching $767.8 billion in 2029–30.
Tax receipts as a proportion of GDP lift to 23.7% over the forward estimates, up from an average of 22.9% over the last 10 years. That’s a meaningful increase — the government is taking a larger share of the economy in tax, partly driven by the CGT and negative gearing changes.
The Budget also includes $37.5 billion in NDIS savings over the forward estimates, the largest savings package on record, and a $14.8 billion plan to secure fuel supplies including a $10 billion investment in immediate fuel reserves. These are big numbers, but they reflect the government’s assessment that the economy faces genuine risks from global instability and inflation.
Unemployment is expected to stay at no more than 4.5% through to 2029–30. That’s low by historical standards, which gives the government some confidence that the economy can absorb these tax changes without triggering a downturn. But the Iran conflict introduces considerable additional risk and uncertainty, as KPMG notes, and that could change the picture quickly.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read The Aussie’s Guide to Guilt-Free Spending and Smart Saving.
Sources and Further Reading
Top Digital Coupon Apps in Australia — Practical tools to cut everyday spending while you adjust your investment strategy.
Simple Budgeting Tips for Australians — Foundational habits that support bigger financial decisions.
KPMG (2026). Australian Federal Budget 2026–27 Analysis. 🔗
Australian Bureau of Statistics (2026). Australian National Accounts: Finance and Wealth. 🔗
CPA Australia (2026). Australian Federal Budget 2026–27: CPA Australia’s Analysis. 🔗
