The Federal Government's proposed property tax changes have sparked significant discussion across the property sector this week, particularly around negative gearing and capital gains tax.
While there is still detail to work through, one thing is important to understand from the outset: these are tax changes, not investment strategies in themselves. Tax outcomes should always be considered as part of a broader long-term property plan, alongside cash flow, borrowing capacity, asset selection, lending structure, and personal goals.
With lending policy, ownership structures, and tax implications becoming increasingly complex, having the right finance strategy matters more than ever. This is where experienced brokers can make a significant difference, not just helping clients secure finance, but helping structure lending correctly from the beginning to support long-term wealth creation and flexibility.
At SW Brokerage, our focus has always been on strategic lending solutions tailored to each client's bigger picture, particularly as market conditions and legislation continue to evolve.
A Snapshot of the Proposed Changes
Existing and Established Properties Purchased Before 12 May 2026
For investors who already own property, or purchase an established property before the proposed cut-off date, current negative gearing arrangements would remain unchanged. However, proposed changes to Capital Gains Tax (CGT) would apply from 1 July 2027 onward. Gains accrued before that date would still qualify for the current 50% CGT discount, while gains after that date may move to a new inflation-indexed method with a minimum 30% tax outcome.
Established Properties Purchased After 12 May 2026
Under the proposal, established properties purchased after 12 May 2026 would no longer qualify for negative gearing income tax offsets from 1 July 2027 onward. Importantly, investment losses would not disappear entirely. Instead, those losses could be carried forward and applied against future rental profits or capital gains at the time of sale. CGT treatment would also shift under the proposed inflation-adjusted method after 1 July 2027.
New Build Properties
Newly constructed properties would remain exempt from the proposed negative gearing restrictions.
At the point of sale, investors in new builds may also have the option to choose between:
- the existing 50% CGT discount, or
- the proposed inflation-adjusted cost base method.
At this stage, it is still too early to fully assess how these settings could influence the new-build market over the longer term, particularly in relation to supply, investor demand, and construction activity.
What the Government's Own Forecasting Suggests
According to the Government's published modelling, the projected impacts over the next decade include:
- approximately 75,000 additional first-home buyers
- around 35,000 fewer dwellings overall
- Property prices continuing to rise, but at a slightly slower pace.
- Rental increases of approximately 0.6%
The broader conversation around these forecasts will likely centre on housing supply. While moderating investor demand may slow price growth in some areas, reduced construction activity and lower supply could continue to place pressure on rentals and housing availability.
Why Structure Matters More Than Ever
As policy settings evolve, the way investors structure their lending and ownership arrangements will become increasingly important.
Many investors focus purely on securing loan approval, but the reality is that the right structure today can create far more flexibility and opportunity in the future. Factors such as ownership entities, borrowing capacity preservation, tax efficiency, cash flow management, and long-term portfolio scalability all need to be considered upfront.
This is where working with experienced brokers becomes critical. At SW Brokerage, we work closely with clients, accountants, and advisers to help ensure lending structures align not just with current goals, but future opportunities as well. In changing markets, strategic finance advice can often be just as important as the property itself.
SMSF Property Investing Likely to Gain More Attention
One area expected to attract increased interest following these proposed changes is property investment through Self-Managed Super Funds (SMSFs).
Importantly, the proposed negative gearing changes do not apply to SMSF-held property in the same way they do for personal investment ownership structures. Because superannuation already operates under its own concessional tax environment, many investors may begin exploring SMSF property strategies more seriously over the coming years.
For some investors, purchasing property through an SMSF can offer:
- a lower tax environment
- long-term retirement planning benefits
- asset diversification
- the ability to leverage superannuation balances into property investment
Of course, SMSF lending and property purchases come with strict compliance requirements and are not suitable for everyone. However, as taxation settings shift outside of super, this structure may become increasingly attractive for certain investors looking to continue building wealth through property.
Having experienced brokers who understand SMSF lending, lender policy, and strategic structuring is essential, particularly as many lenders have very specific requirements around SMSF borrowing.
What This Could Mean for Different Property Owners
If You Already Own an Investment Property
For existing investors, negative gearing arrangements are expected to be grandfathered, meaning there would be no immediate change to current tax treatment.
For CGT purposes, owners may eventually need to calculate gains using either:
- a time-apportionment approach between pre and post 1 July 2027 ownership periods, or
- a market valuation as at 1 July 2027.
As always, investors should seek tailored accounting and taxation advice specific to their circumstances.
If You're Considering Buying an Established Investment Property
The proposed changes could significantly alter the after-tax cash flow position of established investment properties purchased after the cut-off date.
While carried-forward losses may still provide future tax benefits, the removal of immediate negative gearing offsets may influence borrowing strategies, holding costs, and investor appetite in some markets.
If You're Considering a New Build
New build properties currently appear to retain the strongest tax advantages under the proposed framework.
That may increase investor attention toward newly constructed housing, though market conditions, construction costs, location quality, and long-term demand fundamentals will remain critical considerations.
What About Homeowners?
Importantly, these proposed changes do not affect owner-occupied homes. The principal place of residence exemption remains unchanged, meaning Australians would continue to pay no CGT on the sale of their primary home. Negative gearing also does not apply to owner-occupied properties.
Trust Structures
The proposal also includes a minimum 30% tax on discretionary trust income from 1 July 2028. Property owners or investors using trust structures should speak with their accountant or adviser early to understand how these changes may affect future planning.
Final Thoughts
The proposals represent one of the more significant shifts to property taxation in recent years, but there is still time before implementation and further detail is expected to emerge.
What is already clear is that strategy, structure, and advice will matter more than ever moving forward.
Whether it is traditional investing, portfolio restructuring, or exploring opportunities through SMSFs, investors will need to think beyond just interest rates and focus on building sustainable long-term plans.
At SW Brokerage, we believe the right lending structure can create opportunities both now and well into the future, particularly in changing markets where experience and strategic guidance become increasingly valuable.
Ready to talk to a broker?
Get tailored finance and lending advice from the SW Brokerage team.
