Federal Budget 2026 – 2027 and changes related to Australian real estate
The Federal Government has officially announced its 2026-2027 budget, with reforms to Australia’s real estate, tax system and increased housing supply aimed at helping more Australians own their homes.
Support home ownership and increase supply
Australian property tax reform: Change regulations on negative gearing and capital gains tax (CGT) incentives. The changes are estimated to support an additional 75,000 homeowners over the next decade.
Local Infrastructure Fund: Establishes a new A$2 billion Local Infrastructure Fund to support state and local governments in building essential infrastructure (power, water, roads, sewerage systems). This investment is estimated to support the construction of an additional 65,000 new homes, bringing the Government’s total housing infrastructure investment to A$6.3 billion.
Extension of ban on foreign investors: Continue to maintain the ban on foreign buyers buying established homes until mid-2029.
Promote a fair rental market and social security
Tenant benefits: To build a fairer and more sustainable rental market, the Government is committed to working closely with states and territories to standardize and strengthen tenant rights through “A Better Deal for Renters”.
At the same time, the Government continues to implement the second consecutive increase in the Commonwealth Rent Allowance (CRA) over the past three decades. This policy aims to maintain practical financial support, directly helping more than 1.4 million renters across the country reduce the pressure on living costs.
Social housing: Investing 59.4 million AUD to provide social housing for more than 4,000 young people (from 16 – 24 years old) at risk or experiencing homelessness. In addition, an additional 100 million AUD will be disbursed from the Australian Housing Future Fund (HAFF) to improve housing quality for people in remote areas.
The new tax system supports workers
A new tax break worth $250 per year is expected to benefit more than 13 million Australian workers. This policy adds an additional AUD 1,000 invoice-free deductible.
Australian workers on average incomes can save up to A$2,816 per year after tax deductions are applied.
Capital Gains Tax (CGT)
For capital gains tax (CGT), the Government will abolish the current fixed 50% discount rate to switch to a new discount mechanism based on the inflation index, to ensure investors only pay tax on actual profits. According to the roadmap, the minimum tax rate of 30% on capital gains will officially be applied from July 1, 2027 and will only be effective for profits arising after this time.
In particular, investors in new construction projects will have the flexibility to choose between keeping the old 50% discount or switching to apply the new reform regulations.
Deduction of investment losses (Negative Gearing)
Regarding the negative gearing mechanism, the Government decided to narrow the scope, only applying to new housing in order to maximize resources to support housing supply on the market.
According to the reform roadmap, current regulations will remain the same for all real estate purchased before the budget announcement night to ensure the rights of current investors.
However, for existing housing types (old houses) that are traded after the night of the budget announcement, investors will no longer be allowed to use real estate business losses to deduct directly from salary income. Instead, these losses are only deducted from the income generated from real estate, with a mechanism that allows unused losses to be accumulated for settlement in subsequent financial years.
Taxation of Discretionary Trusts
Regarding tax arrangements for discretionary trusts, the Government will officially apply a minimum tax rate of 30% from July 1, 2028, except for some special cases according to regulations.
To help small businesses and stakeholders have enough time to adapt, a transition support mechanism will be implemented within 3 years, starting from July 1, 2027. This measure is intended to create favorable conditions and reduce the financial burden for businesses during the process of restructuring operations in accordance with the new legal framework.
Source: Australian Federal Budget 2026-2027
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