What Budget 2026 does to your investment property
Two things moved in the May 2026 Budget. The 50% CGT discount is gone, replaced by cost base indexation plus a 30% minimum tax on real gains. And rental losses on new established purchases get quarantined from 1 July 2027, so they can't offset your salary anymore. Plug in your numbers and see what a sale ten years out looks like.
What changed in Budget 2026
Announced 12 May 2026, kicks in 1 July 2027. Two changes hit investors at once:
Capital gains tax. The 50% discount goes. In its place, your cost base gets indexed at CPI and a 30% minimum tax sets the floor on real gains. So you pay the higher of your marginal rate or 30%.
Negative gearing.Rental losses on established properties bought after Budget night can't offset your salary anymore. They get parked in a bucket and applied against future rental profit or your capital gain at sale.
Anything contracted before 7:30pm AEST on 12 May 2026 keeps the old rules. New builds get to elect old or new CGT at sale, so the tool picks whichever's cheaper for them. Toggle "Build type" to compare.
The Property
Gross yield: 4.68%
New builds get to pick old or new CGT rules at sale, and keep negative gearing. Established are stuck on the new CGT rules and lose negative gearing against salary from 1 Jul 2027.
You
Sets your marginal tax rate on the gain
The headline year. Chart still shows all 30.
Your assumptions
Annual nominal capital growth
If you sold after 10 years
Under the new rules, you walk away with
−$15k
Old: $267k walk away · New: $252k walk away
Your growth runs well ahead of inflation, so losing the 50% discount hurts more than indexing makes up for. The negative gearing quarantine adds to the pain on the cashflow side.
CGT delta: -$77k · marginal rate at sale ≈ 37% · 30% floor doesn't bind at this income
Walk away wealth, by sale year
What ends up in your pocket once CGT, sale costs, and the mortgage are paid, and the cash you fed the property is recovered.
Year
Y10
Current rules
$267k
Proposed
$252k
Year 10 breakdown
Where the gap actually shows up.
How the CGT bill is built
| Current | Proposed | |
|---|---|---|
Net sale price (after agent + legals) | $951,290 | $951,290 |
Cost base New rules grow the original cost at CPI | $623,125 | $797,653 |
Capital gain New rules only tax the real gain (anything above CPI) | $328,165 | $153,638 |
Less: quarantined NG losses applied Your NG bucket built up to $166,145, but only $153,638 can offset the gain on this property. $12,507 is left over — it could roll into a future residential rental loss or another property sale, but for a single property scenario, treat it as lost. | — | −$153,638 |
Taxable gain Old: half the nominal gain. New: real gain net of the NG bucket | $164,083 | $0 |
CGT bill | $77,052 | $0 |
Walk away wealth
Add it all up.
| Current | Proposed | |
|---|---|---|
Net sale price | +$951,290 | +$951,290 |
Mortgage balance at sale | −$395,520 | −$395,520 |
CGT bill | −$77,052 | −$0 |
Cash you put in (cumulative) Under the old rules you put in $64,347 less over 10 years, because your NG refund knocks the shortfall down each year. | −$239,402 | −$303,749 |
Compound gain at 7.0% If you parked those $64,347 of NG refunds in a HYSA or ETF at 7.0% as you got them, they'd grow by this much over 10 years. The original $64,347 is already in the cash line above. | +$27,331 | +$0 |
Walk away wealth | $266,648 | $252,021 |
Assumptions and limits
- Uses Australian tax brackets for 2025/26 plus a 2% Medicare levy. No surcharges, offsets, or HECS. The Budget's bottom bracket cuts (16% → 15% in FY26/27, → 14% from FY27/28) and the $250 WATO aren't modelled. They make a small difference at modest incomes.
- The new regime applies across the whole hold for simplicity. For purchases settled before 1 July 2027 the old 50% discount technically applies to growth up to that date, and the new rules to growth after. The headline numbers treat the entire hold under one regime. The direction is the same, the dollars are slightly kinder under a precise split.
- The 30% minimum tax is applied at the real gain level. People on income support are exempt per BP1 BS4. That exception isn't modelled.
- Negative gearing quarantine for established stock is modelled in the cashflow each year. Rental losses on properties bought after 12 May 2026 sit in a bucket and apply against the real gain at sale, capped at the gain. The legislation actually lets unused bucket carry forward to offset rental income or capital gains from any other residential property you own. This single property tool treats any leftover as forfeited, which is conservative if you hold more property.
- Mortgage is 30 year P&I at the default investor rate for your LVR. Rental income, expenses, and depreciation come from the same engine that powers the property calculator.
- The indexation rate is your CPI assumption. The RBA's 2 to 3% target band is a sensible starting range, but it's a forecast not a fact. Slide it up or down to see how a higher or lower inflation decade changes the answer.
- CGT is calculated on a single sale. No partial year apportionment for purchases that straddle the 1 July 2027 cutoff.
- Not financial advice. Run your numbers past an accountant before you do anything.
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