Federal Budget 2026–27: What It Means for Your Property Transaction – A guide from our conveyancing practice for buyers, sellers and investors
Last night, Treasurer Jim Chalmers handed down the 2026–27 Federal Budget, and for anyone buying, selling, or holding investment property, this is the most significant Budget in a generation. The Treasurer has called it the most ambitious tax reform in 26 years, and as your conveyancers, we want to walk you through what these changes actually mean in practical terms — particularly the 7:30 pm AEST, 12 May 2026 cut-off, which is now baked into every contract decision you make from this point forward.
(This article is general in nature and is not legal or tax advice, but it will give you a clear picture of where things stand and what we will be talking to our clients about over the coming weeks.)
The two dates every property buyer and seller now needs to know
There are two dates that will dominate property conversations for the next 14 months:
- 7:30 pm AEST, 12 May 2026 — the line in the sand for grandfathering. Properties already owned, or under a contract that was exchanged before this moment, are protected under the existing rules even if settlement happens later.
- 1 July 2027 — when the new negative gearing and capital gains tax rules actually start applying.
That gap between announcement and commencement is roughly 14 months, and it is going to create some very specific behaviours in the market that we, as your conveyancers, are already preparing for.
What’s actually changing
- Negative gearing — restricted to new builds only
From 1 July 2027, investors who buy an established residential property after 7:30 pm on 12 May 2026 will no longer be able to deduct rental losses against their salary or wages. Losses will only be able to be offset against:
- Rental income from other residential investment properties, or
- Capital gains from residential property when sold.
Any excess losses don’t disappear — they can be carried forward to future years and used against future residential property income or gains. But the immediate tax shield against your salary is gone for established properties bought after Budget night. New builds remain fully negatively gearable. The Government has been very deliberate about this — they want investor money pushed toward new supply, not toward bidding up existing housing stock. Investors who buy new builds will still be able to deduct losses against wages and salary in the usual way.
- The 50% CGT discount is being replaced
From 1 July 2027, the 50% capital gains tax discount for individuals, trusts and partnerships is being replaced with:
- Cost base indexation — meaning only “real” capital gains (after inflation) are taxed.
- A 30% minimum tax rate on net capital gains, regardless of marginal rate.
This applies to all CGT assets, not just property — shares, managed funds, business assets, and even pre-1985 assets (which previously had a full exemption) will be brought into the net for gains accruing from 1 July 2027 onwards.
Crucially, the main residence exemption is untouched — your family home remains CGT-free.
For properties held across the transition date, the 50% discount continues to apply to the portion of the gain that accrued up to 30 June 2027, with the new indexation regime applying from 1 July 2027 onwards. This is going to require careful record-keeping, and we will be reminding clients to capture market valuations as at that date.
Investors who buy new builds can choose between the old 50% CGT discount and the new indexation regime when they sell — whichever produces a better outcome.
- Foreign investor ban — extended
The temporary ban on foreign investors purchasing established dwellings — originally running from 1 April 2025 to 31 March 2027 — has been extended in this Budget through to mid-2029. For our practice this means we will continue to need to verify residency and citizenship status carefully on every contract, and to flag any FIRB exposure long before signing
- Housing supply — record $47 billion commitment
The Government has committed to lifting total federal investment in housing to a record $47 billion, with an additional $2 billion for enabling infrastructure (roads, power, drainage) to unlock new housing developments. This is forecast to support roughly 65,000 new homes over the next decade. The 5% deposit scheme for first home buyers continues, and the Help to Buy shared equity scheme remains in play.
What this means for you, our client.
If you are a property investor with existing holdings
The single most important thing to understand is that anything you already own, or anything you have under contract before 7:30 pm AEST on 12 May 2026, is grandfathered. The current rules continue to apply to that property for as long as you own it. You don’t need to panic-sell, and you don’t need to restructure.
Where we will be paying close attention is on transfers between related parties, family law settlements, and trust restructures. A change in ownership after Budget night may well count as a new acquisition for the purposes of these rules, and that could cost grandfathered status. If you are contemplating moving a property between spouses, into a trust, or out of a trust, please speak to us and your accountant before signing anything.
If you are an investor buying after Budget night;
You now have a clear strategic choice that didn’t exist 24 hours ago:
- Buy established — and accept that from 1 July 2027, you cannot use rental losses to reduce tax on your salary. You can still carry losses forward and use them against rental income and eventual capital gains, but the cash flow benefit during the holding period is materially reduced.
- Buy new — and keep full access to negative gearing, plus the ability to choose between the old CGT discount and the new indexation regime on sale.
We expect a meaningful re-pricing between established and new stock as the market digests this. Brand-new dwellings, off-the-plan apartments and house-and-land packages are likely to attract a premium of investor interest.
If you are a first home buyer;
You are arguably the intended beneficiary here. The Government’s own modelling suggests these changes could help 75,000 more first home buyers into the market over the next decade. Less competition from investors for established stock, combined with the extended foreign buyer ban and continued first home buyer support, should — in theory — improve your chances. We are already fielding enquiries from clients who have been priced out of the established market and want to know if conditions will shift in their favour.
A practical note: we expect to see more activity from investors trying to settle before 7:30 pm tonight had already passed, and a possible wave of investors selling before 1 July 2027 to lock in the existing 50% CGT discount on accrued gains. That selling could put additional established stock on the market through 2026 and the first half of 2027 — which may be a window of opportunity for owner-occupiers.
If you are a seller considering listing;
If you are sitting on an established investment property and have been thinking about selling, the timing question has just become sharper. Selling and settling before 1 July 2027 locks in the full 50% CGT discount on the entire gain. Selling after that date means the post-1 July 2027 portion of the gain falls into the new indexation regime with the 30% minimum tax. For properties with very large accrued gains, that difference could be substantial. Please speak to your accountant about modelling both scenarios — we can help with the conveyancing timeline once you have the tax position clear.
If you are buying or selling your own home;
The main residence exemption is untouched. None of these changes affect a typical owner-occupier transaction directly. What we may see, though, is a more active and competitive market during 2026 and early 2027 as investors reposition. Be ready to move quickly, get your finance pre-approval in order, and make sure your contract conditions are tight.
What we are doing in our practice –
A few things have already changed in how we will be working on matters from today onwards:
- Contract date is now everything for investment property. We will be confirming the exact date and time of contract formation in writing on every investor matter, and ensuring our file records reflect the grandfathering position clearly.
- Pre-contract reviews for investors. We are encouraging any investor client thinking about buying or restructuring to come to us before signing, not after. The cost of getting it wrong has just gone up.
- Settlement timing on related-party transfers. Anything that could be characterised as a new acquisition after 12 May 2026 needs careful thought. If you are looking at a family law property settlement, a transfer between spouses, a trust resettlement or a deceased estate transfer, we will need to map the tax consequences with your accountant before papers are signed.
- Valuation records. For properties held across 30 June 2027, we will be recommending clients obtain a formal market valuation as at that date so that the apportionment between old-rule gains and new-rule gains is defensible if the ATO ever asks.
- Foreign buyer due diligence. With the foreign investor ban extended through to 2029, we will continue running our standard residency and FIRB checks on every contract.
A word on the trust changes
While not strictly a property measure, the Budget also announced a 30% minimum tax on the income of discretionary (family) trusts from 1 July 2028. Many of our clients hold investment properties in family trusts. If that’s you, this is worth raising with your accountant — the after-tax economics of trust ownership are changing, and three years of rollover relief is being offered to assist anyone who wants to restructure.
The bigger picture
The Government has framed these changes as rebalancing a system that has favoured asset owners over wage earners, and as a way of channelling investor capital into new housing supply rather than competition for existing stock. Industry bodies have pushed back hard, warning of a “tax grab” that may discourage investment. The truth is that the full market response won’t be clear for some time — there is a 14-month runway before the rules even take effect, and behaviour during that window will tell us a great deal.
What is clear is that the strategic decisions our clients make in the next 14 months matter more than usual. The window between now and 1 July 2027 is going to shape the tax outcome on assets people may hold for decades.
If you have a transaction in flight, a transaction you are thinking about, or a portfolio you want to review in light of these changes, please get in touch. We would rather have the conversation early than untangle a problem later.
CONTACT 07 3236 2852 | info@conveyancinghome.com.au | Level 8, 320 Adelaide Street, Brisbane
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(*This article is general information only and does not constitute legal, financial or tax advice. The Budget measures discussed are subject to the passage of legislation through Parliament and may change. Please contact our office to discuss your specific circumstances.)
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