THE BUDGET THAT BROKE THE INTERNET

Now, back to the topic that has been on everyone’s minds this week. Has Jim Chalmers once again proven that Canberra has absolutely no understanding of how everyday Australians actually build wealth — or is the “most ambitious Budget in decades” squarely focused on relief for the here-and-now, while attempting to fix structural issues for the future?

It’s fair to say our phones have been running hot this week. Our team has been having conversations with clients on both ends of the spectrum, and the opinions couldn’t be more divided following the Labor Government’s decision to backtrack on their election promises.

On one side, there’s real frustration. The argument goes that these negative gearing changes are being marketed as a crackdown on wealthy investors, when in practice they hit working Australians trying to build long-term wealth the hardest. Sophisticated investors with the right structures and capital to adapt? They’ll largely pivot and move on.

On the other, there’s cautious optimism. The case for the Budget is that it’s genuinely trying to deliver relief right now — lower taxes, cheaper essentials, simpler deductions — while taking a longer-term swing at fixing some structural problems in the housing market. At the top of that list: pulling back tax breaks for investors on established homes to level the playing field for first-home buyers trying to enter the market.

As always, the truth probably sits somewhere in between. If you’re still trying to wrap your head around what this means for your property portfolio — now and into the future — I’ve broken down everything that was announced; all facts, no noise.

PROPERTY TAX: THE TWO BIG SHIFTS

Capital Gains Tax (CGT)

The 50% CGT discount is being replaced by a system based on inflation-adjusted cost base indexation, plus a 30% minimum tax on net capital gains:

• Changes apply only to gains arising after 1 July 2027

• Properties you already own are fully grandfathered under existing rules until you sell

• New builds receive a choice between the old 50% discount and the new indexation method — whichever is more favourable

Negative Gearing

From 1 July 2027, negative gearing on established residential property purchased after Budget night (12 May 2026) will be restricted:

• Rental losses can no longer be offset against wages. They are “quarantined” to be carried forward against future rental income or property capital gains

• Exemptions apply to new builds, SMSFs, and all properties held before 7.30PM AEST on Budget night

HOUSING SUPPLY & FIRST-HOME BUYERS

The Budget commits a record $47 billion in housing investment:

• $2B in infrastructure funding to unlock ~65,000 new homes (roads, power, and drainage)

• The 5% deposit scheme is extended, supporting a steady pipeline of first-home buyers, which will continue to drive demand and competition in the entry-level price bracket

• The ban on foreign investors purchasing existing homes is extended to 30 June 2029

• New Build-to-Rent tax exemptions introduced to encourage large-scale apartment development

WHAT IS NOT CHANGING

Several key pillars remain untouched:

• The Main Residence CGT exemption (your primary place of residence) is fully intact

• The 1/3 CGT discount for SMSFs and super funds remains in place

• No changes to CGT or negative gearing for commercial property

• State-based land tax settings are unaffected

BROADER COST-OF-LIVING MEASURES

• Income tax: The rate on $18,201–$45,000 drops to 15% from July 2026, then 14% from July 2027

• Work expenses: A new $1,000 instant deduction (no receipts required) from July 2026

• Health: PBS co-payments capped at $25 for general patients

• Fuel: A temporary reduction in fuel excise for immediate relief at the pump

THE STRATEGIC TAKEAWAYS

1. Structure matters more than ever.

The rules now differ significantly across individuals, trusts, and SMSFs. How you hold an asset directly impacts its long-term after-tax return. I’d strongly recommend speaking with your accountant to understand the best path forward. If you need a recommendation, don’t hesitate to reach out.

2. Focus on yield.

With negative gearing shifting for established homes, assets with manufactured yield — secondary dwellings, dual income setups, value-add opportunities — become more attractive from a cash flow perspective.

3. The SEQ story continues.

For investors across South East Queensland population growth and infrastructure tailwinds remain firmly intact. Budget support for first-home buyers and infrastructure spending continue to underpin middle-ring and growth corridor markets.

4. The grandfathering window.

If you currently hold property, you’re protected. If you’re considering buying, the window between now and July 2027 is worth assessing carefully against your personal financial goals and structure.

As a reminder, none of this constitutes personal financial advice. If you’d like to talk through how these changes interact with your specific situation, feel free to reply to this email or give me a call.

For those of you who aren’t here to be bored by cold, hard and dry budget facts, I’m pleased to let you know we’ve reached the part of the email where I share fantastic opportunities

for owner-occupiers and investors alike (yes, despite the budget), that have come to the market this week.