1) What did the budget changed about negative gearing?
The Government announced that from 1 July 2027, negative gearing will be limited to newly built residential properties. Investors who buy established (existing) residential property after Budget night will no longer be able to deduct rental losses against their salary, wages, or other non-property income.
2) When do the negative gearing changes start and what is the key date?
The new rules are proposed to apply from 1 July 2027. The critical cut-off is 7:30pm AEST on 12 May 2026 (Budget night) — this is the contract date that determines whether a property is treated as "existing" or "newly acquired" under the changes.
3) I already own an investment property. Am i affected?
No. Properties you held before 7:30pm on 12 May 2026 — including properties that were under contract but not yet settled at that time — are grandfathered. You can continue to negatively gear them under the current rules until you sell.
4) What happens if I bought an established rental property after Budget night?
From 1 July 2027, any rental loss on that property can no longer be offset against your wages or other income. Instead, the loss is "quarantined" — you can only offset it against residential rental income or against capital gains when you sell a rental property. Unused losses can be carried forward to future years.
5) Are new builds treated differently?
Yes. Eligible newly built residential properties remain exempt from the changes. Investors in qualifying new builds can still access negative gearing, and the announcement indicated they keep access to the current 50% CGT discount as well.
6) Does this apply to commercial property or only residential?
The negative gearing changes target residential investment property. Commercial property is not the focus of this particular measure, though other Budget measures (such as the CGT changes) can still apply more broadly.
7) Are there any other exemptions from the negative gearing changes?
Yes. The announcement indicated that residential property held within widely held trusts and superannuation funds is excluded, and there are targeted carve-outs for build-to-rent developments and for private investors supporting Government housing programs.
8) Should I rush to buy or sell property before these rules start?
We strongly recommend you do not make rushed decisions. The rules are not yet law and the detail may change, and the right move depends on your overall position. Please talk to us first so we can model how the changes would affect you specifically
9) What is changing with the CGT discount?
The Government announced that from 1 July 2027, the current 50% CGT discount for individuals will be replaced with a system based on cost base indexation combined with a 30% minimum tax on net capital gains for assets held more than 12 months.
10) What does "cost base indexation" mean in practice?
Instead of simply halving your gain, indexation increases your asset's cost base in line with inflation, so only the gain above inflation is taxed. The actual benefit depends on the inflation rate over the period you hold the asset, which can produce a very different outcome from the flat 50% discount.
11) What is the "30% minimum tax" on capital gains?
It sets a floor on the tax payable on a capital gain (after indexation is applied). If your marginal tax rate is below 30%, you may face a top-up so that at least 30% is paid on the gain. If your marginal rate is above 30%, the indexed gain is generally taxed at your marginal rate.
12) When do the CGT changes start, and do they affect gains I've already made?
The new regime is proposed to apply from 1 July 2027. Transitional arrangements mean it applies only to gains arising on or after that date. Gains accrued before 1 July 2027 are intended to remain subject to the current 50% discount rules.
13) Which assets are affected--- is it just property?
No. The CGT changes are much broader than property. They are proposed to apply to all CGT assets held by individuals, trusts, and partnerships, including (from the start date) certain pre-1985 assets, not just residential investment property.
14) Does this affect the family home?
The main residence exemption is not affected by these changes. Your family home generally continues to be exempt from CGT under the existing rules.
15) What about my superannuation fund's capital gains?
Based on the announcement, the CGT discount for complying superannuation funds is not expected to change at this stage. The replacement of the 50% discount is targeted at individuals, trusts, and partnerships.
16) Are there choices available for new residential property investors?
The announcement indicated that investors in eligible new residential property may be able to choose, on disposal, between the existing 50% CGT discount and the new indexation/minimum-tax regime — whichever applies to their situation. The detail will depend on the final legislation.
17) Are any taxpayers exempt from the 30% minimum tax on gains?
The announcement indicated that income support recipients would be exempt from the minimum tax. We can confirm eligibility once the draft legislation is released
18) What is the new tax on discretionary trusts?
The Government announced a 30% minimum tax on the taxable income of discretionary trusts, proposed to start from 1 July 2028. The tax is imposed at the trustee level on the trust's net income.
19) How will beneficiaries be treated under the new rules?
Non-corporate beneficiaries (for example, individuals) who are presently entitled to trust income will receive a non-refundable tax credit for the tax already paid by the trustee, which they can apply against their own tax. Importantly, corporate beneficiaries will not receive this credit
20) What does this mean for " bucket companies"?
Because corporate beneficiaries do not receive a credit for the trustee-level tax, the long-standing strategy of distributing trust income to a bucket company to cap tax at the company rate is expected to no longer be effective. This is one of the most significant practical impacts of the measure.
21) Will this affect income splitting through a family trust?
Yes. The main purpose of the measure is to curb income splitting — distributing income to family members on lower marginal rates. With a 30% floor applied at the trustee level, the benefit of distributing to low-rate beneficiaries (such as adult children studying) is substantially reduced.
22) Are existing family trusts grandfathered?
No general grandfathering was announced. The measure is proposed to capture existing discretionary trust structures from 1 July 2028, not just trusts set up after the Budget.
23) Which trusts and types of income are excluded?
The announcement indicated the minimum tax will not apply to fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, special disability trusts, and deceased estates. Certain income is also carved out — including primary production income, certain income of vulnerable minors, amounts already subject to non-resident withholding tax, and testamentary trusts in existence on 12 May 2026.
24) Is there any relief to help restructure out of a discretionary trust?
Yes. The Government announced expanded rollover relief available for a limited three-year period (from 1 July 2027) to allow eligible businesses and individuals to restructure from a discretionary trust into another entity, such as a fixed trust or a company, without triggering certain tax costs.
25) I run my family business through a discretionary trust--- what should i do now?
Don't make any changes yet. The rules are not law, the detail is still to come, and restructuring has its own legal, asset-protection, and tax consequences. The right answer depends on your trust's income type, your beneficiaries, and your long-term plans. Please book a review with us so we can map out your options ahead of the 2028 start date.
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