Key takeaways:
Treasury modelling puts the direct rent impact at under $2 per week at the median, based on the proposed negative gearing and capital gains tax changes.
Existing landlords would be grandfathered under the proposed reforms if they owned their investment property before 7:30 PM AEST on 12 May 2026.
New builds would retain full negative gearing permanently, which may make property type a more important financial factor for landlords weighing up future purchases.
The proposed transition is designed to limit market disruption, including reducing incentives for investors to buy or sell before specific cut-off dates.
More than 1.4 million renters continue to receive Commonwealth Rent Assistance, providing targeted support for eligible households.
The 2026 Federal Budget included changes to property investor tax rules that may affect more than investors. For landlords, these measures could influence holding costs and investment decisions. For renters, the flow-on effects may shape parts of the rental market over time.
This article explains what the Federal Budget property tax changes could mean for landlords, property investors and renters.
What Treasury modelling says about rent
Treasury modelling in the official budget factsheet estimates that the proposed negative gearing and capital gains tax changes would have a limited impact on rent. For a household paying the current median rent, the expected increase is less than $2 per week.
The Budget also includes housing supply measures intended to ease rental market pressure over time. This includes the $2 billion Local Infrastructure Fund, which is designed to help local governments and state utilities build infrastructure for new housing, supporting up to 65,000 homes over the decade.
However, this does not mean rent will fall. Rental prices are shaped by several factors beyond tax policy, including population growth, vacancy rates, construction activity and the supply of homes in specific locations. The RBA has found that vacancy rates have a strong effect on rent and that population changes and dwelling completions help explain rental vacancy rates.
What the changes mean if you are a landlord
For landlords, the Budget’s proposed negative gearing, CGT and trust tax changes may affect properties differently depending on when they were bought, whether they are established homes or new builds, and how they are owned.
Before buying, refinancing or restructuring, it is worth reviewing how the changes could affect your tax position, cash flow and borrowing capacity.
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If you already own a rental property
Under the announced reforms, landlords who held an investment property before 7:30 PM AEST on 12 May 2026 would be exempt from the negative gearing changes for that property.
This means the existing negative gearing rules would continue to apply until the property is sold, including the ability to offset eligible rental losses against other taxable income, such as salary and wages, subject to tax rules and ATO requirements.
The CGT changes are different. They would apply only to gains accruing on or after 1 July 2027. For assets held before that date and sold later, gains made before 1 July 2027 would be treated under current arrangements, with the 50% CGT discount applying to the difference between the asset's cost base and its value at 1 July 2027, where eligibility criteria are met
Even if your negative gearing position is unchanged, it may still be worth reviewing your investment loan. Your interest rate, repayment type (fixed or variable), loan term and fees can all affect your ongoing repayments and total loan cost.
"Yes, existing properties held before 7:30pm AEST on 12 May 2026 are exempt from the new negative gearing changes, so this is a good time to review rate, cash flow, deductible debt structure, offset usage, fixed versus variable mix, and whether each property is still fit for purpose under the investor's longer-term plan," Rohan Tarak, Aussie Mobile Broker, said.
Switching between interest-only and principal-and-interest repayments may also change both your short-term repayments and long-term interest costs. An Aussie Broker can compare investment loan options across a panel of lenders and help you understand whether refinancing or restructuring may suit your circumstances.
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If you are buying a new rental property after Budget night
The proposed rules treat established homes and new builds differently.
If you buy an established residential investment property after 7:30 PM AEST on 12 May 2026 and before 30 June 2027, you may still be able to offset rental losses against salary or wage income during that transition period.
From 1 July 2027, losses from established residential investment properties bought after Budget night would generally no longer be deductible against wages. Instead, they could be deducted against residential property income, including capital gains, or carried forward to future years.
For eligible new builds, negative gearing would remain available under the proposed rules. This means rental losses from an eligible new build could still be used to reduce taxable income, including salary and wages. The government defines new builds as residential properties that genuinely add to housing supply, subject to some exclusions.
This makes property type a more important consideration for investors when comparing established homes and newly built properties. An Aussie Buyer's Agent can help you assess new-build opportunities, including whether a property appears to meet the relevant criteria, the developer's track record and rental demand in the area.
Franklin Webber, Aussie Buyer's Agent, said understanding the contract is the critical first step before committing to a new build.
"Make sure you have read and fully understand the contract," he said. "Seek advice from a solicitor or conveyancer — some specialise in this area — and make sure you have a clear understanding of the roles and responsibilities of the land developer and builder. Try to ensure it is a fixed price contract."
However, you should confirm tax eligibility and treatment with a tax adviser before you buy.
On rental yield and location, Webber said the fundamentals have not changed as much as some investors might expect.
"It is no different to before," he said. "If someone is looking to negatively gear for tax reasons, a lower yield might make more sense. The good thing about new builds is the ability to claim depreciation on the asset."
Because the proposed tax treatment differs between new builds and established homes, it is worth getting advice before committing. An Aussie Broker can also help you understand how the purchase may affect your borrowing power, repayments and cash flow.
What this means for cash flow planning
For investors buying an established residential investment property after Budget night, the proposed negative gearing changes may affect cash flow from 1 July 2027.
From that date, losses from affected established residential properties would generally no longer be deductible against salary or wage income. Instead, they would be deductible against residential property income, including residential capital gains, or carried forward to future years.
If rental losses can no longer reduce salary or wage income, some landlords may receive a smaller tax refund, or none at all, for that loss. For investors who have used that refund to help manage holding costs, this could change how the investment numbers stack up.
"They should start planning on the basis that the property needs to stand up more on its own cash flow," Tarak said. "From 1 July 2027, losses on affected residential investment properties purchased after the announcement time will generally only be deductible against residential property income and gains, with excess losses carried forward, so investors should not assume the same annual refund support will always be there."
That makes the fundamentals of an investment property more important.
Before buying, consider expected rental yield, vacancy risk, property management fees, maintenance and insurance costs, interest rate changes, and the loan structure, including interest-only or principal-and-interest repayments. Moneysmart's investment property guidance includes rental income, loan repayments, ongoing expenses, repairs and maintenance, and the need to cover periods without tenants as part of the cash flow picture.
For landlords with more than one property, the changes may also affect broader portfolio planning. Lenders assess income, expenses, liabilities, rental income and existing debt commitments when considering serviceability, so your borrowing capacity should be reviewed across your full portfolio, not just one property.
Tarak said landlords should be coming to their broker with specific questions in light of the Budget changes.
"They should be asking: are my existing properties grandfathered? How do the new rules affect my next purchase? Should I prioritise debt reduction or liquidity? What does my portfolio cash flow look like without relying on tax refunds? And is my current lender still competitive for both pricing and flexibility?"
An Aussie Broker can help you compare loan options and lender policies, assess borrowing capacity or available equity and understand how different loan structures may affect your cash flow before you refinance, restructure or buy another investment property.
If you hold property in a discretionary trust
The Budget proposes a minimum 30% tax on the taxable income of discretionary trusts from 1 July 2028, with some exceptions.
Under the proposed rules, the tax would be paid by the trustee, while non-corporate beneficiaries would generally receive non-refundable credits for tax paid by the trustee.
Expanded rollover relief is also expected to be available for three years from 1 July 2027. This is intended to help eligible small businesses and other taxpayers restructure out of discretionary trusts, such as by forming a company or a fixed trust.
If you hold an investment property through a discretionary trust, speak with your accountant or tax adviser before making any changes.
Trust structures may affect tax, asset protection, estate planning and borrowing, so it is important to understand how the proposed rules may apply to your circumstances.
An Aussie Broker can help you review how lenders may assess your ownership structure and loan position if you plan to refinance, restructure or buy another property. For tax, legal or structuring advice, speak with a qualified accountant, tax adviser or solicitor.
Pro tip: This is general information only and does not constitute financial, tax or investment advice. Speak with a qualified tax adviser about how the proposed changes may apply to your finance.
What the changes mean if you are a renter
For renters, the Budget points to three practical areas to watch: rent impacts, rental support and changing tenancy rules. If buying is on your radar, it is also worth checking how tax changes, deposit schemes and grants could affect your path from renting to owning.
Rent impact from the tax changes
Treasury modelling suggests the proposed negative gearing and capital gains tax changes would have a limited direct impact on rent. For a household paying the current median rent, the expected direct increase is less than $2 per week. The Budget also includes housing supply measures designed to add more homes over time. The Treasury expects the combination of these policies to place downward pressure on rent as supply increases.
This does not mean rent will fall. Rental prices are influenced by factors beyond tax settings, including vacancy rates, population growth, dwelling completions and demand in specific markets.
If you are renting and considering buying, an Aussie Broker can help clarify your borrowing power, deposit options and potential home loan options before you make your next move.
Commonwealth Rent Assistance
The Budget confirms continued support for more than 1.4 million renters through Commonwealth Rent Assistance (CRA). This follows the first back-to-back increases to CRA in more than 30 years.
CRA may be available if you receive an eligible payment and your eligible accommodation costs are above a certain amount. Eligibility depends on the payment you receive, the type of accommodation cost you pay, and the amount you pay.
You do not need to submit a separate claim for Rent Assistance. Services Australia checks eligibility when you claim certain payments or update your address, accommodation or rent details.
If you rent and receive an eligible payment, make sure your details are up to date with Services Australia so any CRA entitlement can be assessed.
If you are renting and planning to buy, an Aussie Broker can help you understand your borrowing power, deposit position and potential home loan options before you make your next move.
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Renters' rights reforms
The Budget confirms the Government is continuing to work with states and territories on A Better Deal for Renters, a national reform agenda aimed at strengthening and aligning renters' rights across Australia.
The National Cabinet's agreed reforms include work on reasonable grounds for eviction, limits on rent increases, rent bidding, rental applications, family and domestic violence protections, break-lease fees, and minimum rental standards.
However, tenancy laws are still applied by each state and territory. This means the protections available to you, and when they start, depend on where you live. Check your state or territory tenancy authority for current rules on rent increases, lease terms, minimum standards, pets, repairs and eviction processes.
NSW and Victoria, for example, publish their own rental rules and reform timelines.
If you are renting and planning to buy, an Aussie Broker can help you understand your borrowing power, deposit position and potential home loan options before you make your next move.
Renters considering buying
If you are renting and planning to buy, the Budget's tax and housing measures may affect your savings plan and timing. From 1 July 2026, the Government is reducing the 16% tax rate on taxable income between $18,201 and $45,000 to 15%, with a further reduction to 14% from 1 July 2027. Whether this helps your deposit savings will depend on your income, expenses and saving habits.
The Government also estimates its negative gearing and capital gains tax reforms could support an additional 75,000 homeowners over the decade.
Before you start looking, check which home buyer support options may apply to you. The Australian Government 5% Deposit Scheme has unlimited places, no income caps and higher property price caps from 1 October 2025. Eligible first-home buyers may be able to buy with a minimum 5% deposit without paying lenders' mortgage insurance, while eligible single parents or legal guardians may be able to buy with a minimum 2% deposit.
Tip: Property price caps, owner-occupier requirements, participating lender approval and other eligibility criteria apply.
State and territory grants or concessions may also be available, depending on where you buy, the property's value, and your personal circumstances. Check the relevant state or territory revenue office before relying on any grant or concession.
A good first step is to understand your borrowing power. Use the Aussie borrowing power calculator for an initial estimate, then speak with an Aussie Broker for a more detailed view based on your income, expenses, deposit and lender criteria.
Pre-approval may also be worth considering before you begin your property search. It can help you understand your likely borrowing range and guide your shortlist, but it is not final loan approval. An Aussie Broker can help you get pre-approval ready and explain what lenders will need to see.
Renters may not see an immediate change from the tax reforms, but it is still worth checking the support, protections and buying pathways available to you.
Keep your Services Australia details up to date, check your state or territory tenancy rules, and review your borrowing power if buying is becoming part of your plan.
The bigger picture for the rental market
The Federal Budget changes sit alongside broader pressures in the rental market, including housing supply, population growth, vacancy rates and affordability. The proposed negative gearing and capital gains tax changes are designed to shift some investor incentives away from established housing and towards new supply.
Whether that leads to more homes and more stable rental conditions will depend on how much new housing is delivered, where it is built, and how local rental markets respond over time.
For landlords, the next step is to review how the changes may affect your tax position, loan structure and investment cash flow. For renters, it is worth understanding your current rights, checking any support you may be eligible for and planning ahead if buying is on your radar.
Aussie can help you understand your home loan options, whether you are refinancing an investment property, reviewing your borrowing power or preparing to buy. For tax, legal or investment advice, speak with a qualified professional.
Note: This article contains general information only and does not constitute financial, tax or investment advice. Speak with a qualified tax adviser about how the changes may apply to you.