What the Federal Budget Means for Your Investment Property

Tuesday night's Federal Budget delivered the most significant change to investment property taxation in more than two decades. We want to give you a clear summary of what has changed, what hasn't, and what, if anything, you should do next. 

These are material changes that deserve careful consideration. They are not, however, a reason for quick decisions. 

What’s Changing

The Government announced two headline reforms, both taking effect from 1 July 2027: 

Both changes apply only to assets acquired after 7:30pm on 12 May 2026. 

Importantly, for assets already held, the 50% CGT discount applies to all gains accrued up to 1 July 2027, only growth from that date onward falls under the new indexation rules.

What is Protected

If you already own investment property, the key elements are: 

• Existing investments are grandfathered: Your negative gearing arrangements remain fully intact for as long as you hold the property.

• You retain the 50% CGT discount on all capital gains accrued to 1 July 2027

• Only gains accruing after that date are subject to the new indexation rules

• Primary residence is fully exempt: Your home remains entirely unaffected

• New builds purchased after budget night retain both negative gearing and the 50% CGT discount

The Dollar Impact: An Example

Scenario: Buy $600,000, Value $1,000,000 at 1 Jul 2027, Sell $1,200,000 in Mid-2029 

The table below shows the CGT impact of the new split treatment on an existing asset sold after 1 July 2027. The pre-2027 gain retains the 50% CGT discount; the post-2027 gain is taxed under the new indexation rules. 

* Estimated figures only, Individual outcomes will vary please consult your accountant.

Tax is always only one consideration, not the whole equation

It is easy and understandable to read the Budget news and immediately think about selling. We would encourage you to pause on that instinct.

Remember, tax is always just one element of a property investment decision. Future capital growth, rental yield, the cost of selling and redeploying capital, and the current market conditions all need to be considerations. 

The grandfathering provisions means that very careful consideration needs to be given to the disposal of any property. Once a grandfathered property is sold, the pre-existing benefits, including negative gearing, are gone for good.

If You Are Considering Selling: Take Your Time, But Not Too Much 

For investors who do decide, after careful consideration, that selling makes strategic sense, there is no need to rush, but there is a time-line worth noting. 

You have until 30 June 2027 before the new CGT rules apply to any gains accruing after that date. That gives you more than twelve months to make a considered decision and execute it well. Our team can assist you through that process. 

However, with Property conditions softening across most capital cities, and with further interest rate rises still likely in the near term, there is a reasonable case that conditions could weaken further before they improve. Selling into a weak market to avoid a future tax change is a trade-off that needs to be considered carefully. Further, it may be worth exploring alternative avenues in releasing equity or funds from a grandfathered property, including potentially releasing equity on your investment property via HomeFlex offering. 

What We Recommend

1. Don't make a rushed decision. You have time, and the right decision made calmly is almost always better than a fast one made under pressure.
2. Get a current valuation before 30 June 2027. Our network of Vendor Advocates and Sales Agent partners can provide up-to-date assessments of your property's value in today's market. If you want to understand what your asset is worth right now, speak to your LongView contact and we can arrange this for you.
3. Consult your accountant and financial planner before making any decision. The tax implications are real and personal, they depend on your cost base, your current income, your other assets, and your timeline. General commentary, including ours, is no substitute for advice tailored to your position.
4. Consider the full picture. Tax is one variable. Yield, future growth prospects, grandfathering benefits, your capital re-deployment options, and market timing all matter.
   
   

A Note for LongView Shared Equity Fund Investors

For Investors in LongView’s Shared Equity Fund, the impact of these changes on your investment is likely to be relatively limited. 

The fund invests alongside owner-occupiers, existing homeowners who remain co-resident in their property. The primary residence CGT exemption applies to the homeowner's share, and the fund's investment model is not reliant on negative gearing. The properties the fund invests in sit outside the categories most affected by last night's changes. Indeed, we believe that on balance, these changes likely improve the investment outlook for the fund.