Every time the government changes the rules around property investment, the same thing happens. Phones ring, inboxes fill, and investors who have been quietly building wealth for years suddenly wonder if the ground has shifted beneath them. After the 2026 Federal Budget, this week has been no different.

Australia has changed the rules around property investment before. Negative gearing has been wound back, CGT has been reformed, and each time the commentary has followed the same pattern: alarm, adjustment, and then a return to the fundamentals that make property one of the most enduring wealth-building strategies available to Australians. The 2026 Budget is significant, but it is not without precedent.

For most current investors, the immediate impact is more limited than it first appears. However for those investing in the future there are real changes that will need to be navigated more carefully.

Negative Gearing

From 1 July 2027, negative gearing for residential property will be limited to new builds. This is reassuring news for existing investors who are negatively-geared as arrangements will remain unchanged. 

For those looking to expand their portfolios, negative gearing will continue to apply to newly constructed properties. This is a deliberate policy decision aimed at encouraging additional rental supply rather than removing investment incentives from the market entirely.

One detail that has received less attention is what happens to losses accumulated on a property that no longer qualifies for negative gearing. Those losses do not disappear. They carry forward and can be applied against the capital gain when the property is eventually sold, which is a meaningful offset that investors need to factor into their long-term calculations.

Capital Gains Tax

The CGT changes are more complex, and it is important to note upfront that CGT only applies when a property is sold. For investors not planning to sell, there is no immediate impact.

From 1 July 2027, the long-standing 50% CGT discount will be replaced with an indexed system linked to property value growth above inflation. Investors who owned property prior to that date are expected to have a choice in how CGT is calculated when they eventually sell. They may be able to apply the old system to gains accrued up until 1 July 2027, and the new indexed approach to gains after that point.

The full detail on transition arrangements is still being confirmed by the Treasury, so investors should not make assumptions until that guidance is released.

What Investors Should Do Now

The most important thing investors can do right now is resist the urge to act on incomplete information. The Treasurer was explicit that significant detail around the CGT transition is still to be worked through. Speaking with an accountant before drawing conclusions in this case is genuinely necessary.

For investors not planning to sell, it is business as usual. The underlying case for residential property investment has not changed because of a tax adjustment. Property has demonstrated its capacity to build stability and long-term growth across many years and many different tax regimes. The 2026 Budget is a meaningful shift, but it is not the first time the rules have changed, and investors who take a considered, long-term view will be well placed to navigate it.

Rental markets continue to show strong fundamentals, with historically low vacancy rates, consistent tenant demand and resilient property values. Those conditions support both rental income and long-term capital growth, and they are not altered by the Budget changes.

For investors with questions about how these changes apply to their individual circumstances, the most valuable step is an honest conversation with both a financial adviser and a property professional who understands the local market. Although the taxation changes are not ideal, they do not take away the enduring strength of property as a long-term investment vehicle.

Emma Slape is CEO of Turner Real Estate, an Adelaide-based residential property agency with more than 35 years of operation. Turner Real Estate can be contacted at www.turnerrealestate.com.au or on (08) 8468 1000.