For decades, Australian property investors have played one game: buy, hold, and wait for the capital growth. The tax system rewarded patience, so low-yield residential property that barely covered its own costs still made sense on paper. That game has now changed for good. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. This is not a proposal under debate. It is law, and it resets how you should think about your next purchase.
What actually changed
From 1 July 2027, the 50% Capital Gains Tax discount is abolished for individuals, trusts and partnerships. In its place, the tax system will apply CPI cost base indexation for assets held at least 12 months, plus a minimum 30% tax on the post-reform portion of your capital gain. These changes only apply to gains that accrue after 1 July 2027, so nothing retrospective is being taxed.
Negative gearing is also being narrowed. From 1 July 2027, it will be limited to new builds. If you are holding or buying an established residential dwelling acquired after 7:30pm AEST on 12 May 2026 (Budget night), the rules tighten further: from 1 July 2027, rental losses on that property are quarantined. You can only deduct them against residential rental income or capital gains from residential property, not against your salary or other income.
There is grandfathering. If you already held a property, or already had it under contract, at the 12 May 2026 announcement, you keep the current rules on that asset. And your primary place of residence remains exempt from CGT entirely, as it always has been.
The one asset class that keeps the old advantage
Here is the part that matters most if you are deciding where to put your next dollar. Eligible new build residential properties are exempt from these changes. If you buy an eligible new build, you can still access both negative gearing and the 50% CGT discount, the same combination that has driven property returns for a generation.
Everything else in residential property loses ground. Established dwellings bought after Budget night face quarantined losses and, from 1 July 2027, a smaller CGT concession replaced by indexation and a minimum tax rate. New builds do not. That is not a marketing angle, it is what the legislation says. New residential dwellings are now the asset class that keeps the full tax advantage that used to apply across the board.
Why this reshapes the growth-only strategy
The growth-only strategy has always carried a hidden cost: opportunity. You tie up capital in a property that produces little or no positive cash flow, and you wait, sometimes for years, betting that the sale price will make the wait worthwhile. The 50% discount was what made that bet pay off, because it meant the tax office took a smaller cut of your eventual profit.
For established property bought after Budget night, that mechanism is being dismantled. CPI indexation and a 30% minimum tax replace a flat 50% discount, and rental losses on those properties can no longer offset your income tax bill the way they once could. A property bought purely for capital growth now hands a larger share of its eventual profit to the tax office, and the years of thin or negative cash flow you tolerated to get there look far less justified.
New builds sidestep this entirely. They keep the negative gearing benefit and the 50% discount, which means the maths that used to apply to all residential property now only works cleanly for new stock.
Why yield matters even more now
This is where the case for cash flow strengthens further. New builds already tend to deliver stronger rental income than established stock, and purpose built assets take that further. ACIGP’s NDIS properties target yields of 10% to 15%. Co-living developments target 8% to 10%. Triple living properties target 8% to 10%. These are the returns you are paid while you hold the asset, not a promise that depends on a future sale.
Combine that yield with a tax structure that still rewards new builds with both negative gearing and the CGT discount, and you get an asset class that wins on two fronts at once: income now, and a tax position that has not been eroded. Established property investors are being asked to accept a weaker version of both.
Front-end cash yield is powerful for a simple reason: it is money in your hand now, not a promise decades away. That liquidity lets you pay down debt faster or reinvest into the next asset. It also reduces how much of your outcome depends on the capital gains rules at the point you eventually sell.
What this means for your next purchase
If you are buying now, the legislation gives you a clear signal. New build residential property, and purpose built assets in particular, is the category that keeps the full negative gearing and CGT discount combination after 1 July 2027. Established dwellings bought after 12 May 2026 face quarantined losses and a reduced capital gains concession on top of typically lower yield.
Ask a harder question of every property you consider: does this asset pay you while you hold it, and does it keep the tax treatment that made property attractive in the first place? For new build purpose built property, the answer to both is yes under the new law. That is a structural advantage, not a sales pitch, and it is worth understanding before you commit capital to an established asset that is now working against a weaker tax position.
ACIGP is built by accountants, brokers and builders with over 100 years of combined experience, working across NDIS, co-living and triple living developments in Victoria. We do not guarantee returns, but we can walk you through exactly how the new rules apply to the asset you are considering and what that means for your after-tax outcome.
This is general information only and not financial, tax or legal advice. Speak to a licensed adviser about your circumstances.
Get a free Returns Assessment
The rules around negative gearing and CGT have changed, and new build property now sits in a different tax position to established stock. Find out what that means for your capital. Book a free Returns Assessment with the ACIGP team and see how NDIS, co-living and triple living assets stack up under the new law, built to pay you now and keep the tax advantages that established property is losing.