Newsletter September 2026

Your Financial Guardians

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Budget Changes: Should Investors be Concerned

Changes to negative gearing and capital gains tax have understandably attracted plenty of attention. But before making any changes to your investments, it is important to understand what is actually changing and when. 

From 1 July 2027, negative gearing will generally be restricted to new residential properties. Properties held before 7:30pm AEST on 12 May 2026 are exempt from these negative gearing changes. 

The Government also intends replacing the existing 50% CGT discount for individuals, trusts and partnerships with cost-base indexation and a 30% minimum tax on capital gains. Importantly, the CGT reforms will apply to gains accruing after 1 July 2027. 

Current Status of Trust Tax and CGT Changes

• General CGT Reforms (Passed):

  • The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed and received Royal Assent on 26 June 2026.

  • Replaces the 50% CGT discount for trusts and individuals with cost-base indexation and a 30% minimum tax rate starting 1 July 2027.

    
    

• 30% Minimum Tax on Discretionary Trusts (Pending / Draft

  • This specific trustee-level tax measure is scheduled for 1 July 2028.

  • Exposure draft legislation was released for consultation in September 2026, meaning it is not yet fully legislated law.

For some investors, these changes may affect the relative attractiveness of different investment strategies in the future. But tax should rarely be the only reason for making an investment decision. 

How could the changes work in practice?

The following simplified examples ignore purchase and selling costs, capital improvements, depreciation adjustments, capital losses and Medicare levy. They assume the property is owned by an Australian resident individual.

Example 1: Sale before 1 July 2027

Assume an investor bought an investment property 15 years ago for $500,000 and sells it before 1 July 2027 for $1,000,000. The existing CGT rules apply.

Calculation	Amount
Sale proceeds	$1,000,000
Less cost base	($500,000)
Capital gain	$500,000
Less 50% CGT discount	($250,000)
Taxable capital gain	$250,000

The $250,000 is the taxable capital gain, not the tax payable. It is included in the investor’s assessable income and taxed at their applicable marginal rate.

Example 2: Sale in July 2030

Assume the property is worth $1,000,000 on 1 July 2027 and is sold for $1,200,000 in July 2030. The gain is divided into two periods:

• Gain accrued to 1 July 2027: $500,000. Under the simplified assumptions, the 50% discount produces a taxable capital gain of $250,000.

• Gain accrued after 1 July 2027: the $200,000 increase is calculated under the new rules. The 1 July 2027 cost base is indexed for inflation, and the resulting real gain is subject to the new tax treatment, including the 30% minimum tax rule.

An exact dollar result for the post-2027 component cannot be shown until the applicable indexation and the investor’s circumstances are known. The $200,000 increase should not simply be multiplied by 30%.

What happens if the investor buys another property?

After the sale, assume the investor borrows $1,000,000 towards another residential investment property. For illustration, assume annual rent of $50,000 and deductible expenses, including interest, of $80,000, creating a $30,000 rental loss.

Calculation	Amount
Rental income	$50,000
Deductible expenses, including interest	($80,000)
Rental loss	($30,000)

Alternative A: Buying a qualifying new residential property

If the replacement property qualifies as a new build, the $30,000 rental loss can generally continue to be deducted against the investor’s other income, subject to the ordinary deduction rules and their individual circumstances.

Alternative B: Buying an existing residential property

If the investor buys an established property after Budget night, the $30,000 loss generally cannot be deducted against unrelated income such as salary or wages from 1 July 2027. It can be applied against residential property income, including relevant capital gains, with unused losses carried forward for future years.

Key takeaway: Do not make a property decision based on tax alone. Selling a grandfathered property and buying an established replacement could produce a different negative gearing outcome.

Our message is simple: don't react to the headlines. Review your strategy first. 

if you own an investment property, are considering purchasing one, or are thinking about selling an investment in the coming years, please talk to us. We can help you consider how the new rules fit with your broader goals and financial plan. 

Contact us to arrange a review of your investment strategy.

Phone: 07 38060695.

Email: tony@yourfg.com.au

Important information: This article contains general information only and does not take into account your objectives, financial situation or needs. Please seek appropriate financial and taxation advice before making financial decisions. 

The examples are simplified illustrations only. Actual outcomes depend on the legislation, indexation, ownership structure, deductible costs and the investor’s complete tax position.