Australia’s capital gains tax and negative gearing reforms — announced in the 2026–27 Federal Budget and now law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 — take effect on 1 July 2027, and property investors are already moving to get ahead of them. From that date, negative gearing on residential property investment will be limited to new builds, and the 50% CGT discount for individuals, trusts, and partnerships will be replaced with cost-base indexation (the purchase price adjusted for inflation via CPI) plus a 30% minimum tax rate on the real capital gain. Properties held at the time of announcement (7:30pm AEST, 12 May 2026) are exempt from the negative-gearing change, and the CGT reform applies only to gains that accrue after 1 July 2027 — gains built up before that date keep the existing 50% discount.
That split-treatment design means any investor holding a property across the transition date will eventually need to show how much of a future gain accrued before 1 July 2027 versus after it — and the property’s market value on that date is the key number the calculation hinges on. That has triggered a rush among investors to obtain a formal, defensible valuation now, roughly a year ahead of the actual transition, rather than risk relying on a retrospective estimate later.
Westpac Senior Economist Matthew Hassan called the reform a shift in arrangements “that have been in place for 26 years,” expected to “transform housing markets over the longer term in Australia,” but cautioned against overreacting in the short run: “There’s a risk that there’s just a fear factor associated with this and that the impact of the changes may be overestimated,” he said, adding the changes were “not expected to be overly disruptive near term.” Sangram Rana, a senior financial adviser at BuildMyWealth, urged investors to keep the tax change in perspective: “Investors should start with the plan, not the tax rule. Tax law changes. Investment goals don’t.” Some administrative detail — including aspects of the ATO’s implementation approach — is still pending.
References
Australian Taxation Office – Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax / Aussie – Why property investors may want a valuation before 1 July 2027
