THE BUDGET & INVESTING

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 Negative Gearing restricted to new builds. 

Restrictions to negative gearing from this evening and capital gains tax discounts from July 2027 and the closure of a family trust loophole will shift how Australians are taxed in the favour of workers.

And the government expects it will move 75,000 properties from the hands of investors to homeowners, slow house price growth and eventually lead to lower rents.

The Government will replace the 50 per cent Capital Gains Tax (CGT) discount with a discount based on inflation and introduce a minimum 30 per cent tax on gains from 1 July 2027.

This reform means that investors will only pay tax on their real capital gain, restoring the original intent of the CGT arrangements. The CGT reforms will only apply to gains arising after 1 July 2027. Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements.

The Government will limit negative gearing to new builds from 1 July 2027, to focus tax support on new supply.

Existing arrangements will remain unchanged for all properties held before Budget night, and investors who buy new builds will still be able to deduct losses from other income.

Investors who buy established housing after Budget night will still be able to deduct losses against residential property income. They will be able to carry forward unused losses to future years but won’t be able to deduct them against other income like wages.

The Government will introduce a minimum tax of 30 per cent on discretionary trusts from 1 July 2028 with some exceptions.

Rollover relief will be provided for three years from 1 July 2027 to assist small businesses and others that wish to restructure.

The first Home Owners Grant. 

It allows buyers to access a Federal Government 5% deposit scheme. These type of  demand side buyer incentives can increase demand and potentially driving up prices, especially if there isn't a corresponding increase in housing supply. They have an immediate impact  to boost demand from buyers who might have waited otherwise, leading to more competition and short-term price impacts.