Key takeaways
The $20,000 instant asset write-off may affect your assessed income if you claim large deductions in the same financial year as your home loan application.
Loss carry-back may help eligible companies manage cash flow. However, a reported loss can still appear in the financials lenders' review.
Personal tax cuts may improve take-home pay for sole traders and small business owners from 1 July 2026, depending on income, expenses and business structure.
Application timing matters for self-employed borrowers, as deductions, loss years and recent taxable income can influence how lenders assess borrowing capacity.
The 2026 Federal Budget changed a few tax settings that may affect self-employed Australians, sole traders and small business owners. Some could improve cash flow. Others may affect how lenders assess your income when you apply for a home loan.
If you are planning to buy in the next one to two years, it is worth understanding how these changes may affect your borrowing capacity before you apply.
What changed in the 2026 budget and why it matters for your home loan
The section below summarises the key 2026 budget measures self-employed borrowers may need to factor into home loan timing, income assessment and cash flow planning.
Budget changes at a glance
Budget measure | Who it may affect | Start date | Why it matters |
|---|---|---|---|
Eligible small businesses with turnover up to $10 million | 1 July 2026 | May reduce taxable income in the year the deduction is claimed | |
Eligible companies, mostly small businesses | 2026–27 | A reported loss may need to be explained in your application | |
Eligible start-up companies in their first two years | 2028–29 | May help cash flow, but may not replace lender trading-history requirements | |
Eligible Australian workers, including sole traders | From 2026–27 and 2027–28 | May improve after-tax income, depending on personal circumstances | |
Small and medium businesses that opt in | 1 July 2027 | May support smoother cash flow and tax planning |
The $20,000 instant asset write-off is now permanent
From 1 July 2026, the Government has announced it will make the $20,000 instant asset write-off permanent for eligible small businesses with an annual turnover under $10 million.
This means eligible businesses could immediately deduct the full cost of eligible assets costing less than $20,000 each, rather than depreciating them over time. The Government estimates the measure will improve small business cash flow by around $890 million over five years.
For self-employed home loan applicants, the timing of this deduction matters. An immediate write-off could reduce taxable income in the year it is claimed, which may affect the income figure a lender uses to assess borrowing capacity.
Lender policies vary. Some lenders assess self-employed income using recent tax returns, business financials or an average of recent income years. Others may look at certain add-backs or one-off expenses differently. A large deduction close to your application date may reduce what a lender is prepared to offer, even if your business cash flow is otherwise steady.
Rohan Tarak, Aussie Mobile Broker, said the tax benefit and the lending impact need to be modelled together before committing to a purchase.
"The key issue is that a tax-effective purchase can still reduce borrowing power," he said. "Before purchasing, they should model both the tax benefit and the home loan impact with their broker and accountant."
Before you claim a large deduction | Why it matters for your home loan |
|---|---|
Speak with your accountant. | They can explain how the deduction may affect taxable income. |
Check your expected application timing. | A lower-income year may affect how your income is assessed. |
They can help you understand how different lenders may treat your self-employed income. |
If you plan to apply for a home loan in the next one to two years, talk to your accountant before making major asset purchases or tax decisions. Then get guidance from an Aussie Broker about how different lenders may assess your income, deductions and business structure.
Loss carry-back is being reintroduced
From 2026–27, the Government is reintroducing loss carry-back for eligible companies. Eligible companies may be able to use current-year tax losses to claim a refund against tax paid in the prior two income years.
The Budget states this is expected to benefit up to 85,000 companies, mostly small businesses.
For self-employed home loan applicants, the lending impact depends on how the loss is reflected in their financials. A reported loss may help your company's tax position or cash flow, but it may also need to be explained during a home loan assessment.
Lenders may want to understand whether a one-off event, business investment, temporary trading conditions or an ongoing income issue caused the loss.
If your company reports a loss | Why it matters for your home loan |
|---|---|
Keep clear records of what caused the loss. | Lenders may ask whether it was one-off or ongoing. |
Prepare recent financials and tax documents. | These help show the broader income picture. |
Check with your accountant before applying. | They can explain how loss carry-back affects your tax position. |
They can help clarify how different lenders may assess your self-employed income. |
Loss carry-back applies to eligible companies, so it may not apply to every self-employed borrower or business structure. If you operate as a sole trader, a trust or a partnership, get advice from your accountant to see whether the measure applies to your situation.
A new start-up loss refundability measure
From 2028–29, the Government has announced it will introduce a loss refundability measure for eligible small start-up businesses.
Small start-ups in their first two years of operation may be able to claim a tax refund for losses, up to the value of fringe benefits tax and withholding tax paid on employee wages. The government estimates up to 25,000 young companies could be eligible each year.
For newer business owners planning to buy property, this may be worth factoring into longer-term cash flow planning. However, it does not replace the income checks lenders use when assessing a self-employed home loan application. Lenders may still ask for trading history, lodged tax returns, business financials and evidence that income is ongoing.
What to check | Why it matters for your home loan |
|---|---|
Whether your business is eligible | The measure applies to eligible small start-ups, so it may not suit every structure or borrower. |
How the refund affects cash flow | It may support working capital, but lenders will still assess your broader income position. |
What documents lenders may need | Newer businesses may need stronger supporting records to explain income and business performance. |
When to apply | Applying before your business has enough financial history may limit your lender options. |
If your business is less than two years old, discuss this with your accountant about how the measure may apply to your tax position. Then ask an Aussie Broker about how different lenders may assess your self-employed income, business structure and application timing.
The personal tax cuts apply to you, too
If you pay yourself a wage, receive income through a trust or operate as a sole trader, the staged personal tax cuts may affect the tax payable on your personal taxable income.
From 1 July 2026, the Government has announced the tax rate on income between $18,201 and $45,000 will be reduced from 16% to 15%, then to 14% from 1 July 2027. The Government has also announced a $250 Working Australians Tax Offset for the 2027–28 income year for eligible Australian workers.
A $1,000 instant tax deduction is available from the 2026–27 income year for eligible Australian workers. Eligibility and the final rules should be checked against current ATO guidance or with a tax adviser.
For borrowers, any increase in after-tax income may help with day-to-day cash flow, repayments, savings goals or building an offset account balance over time. However, it will not automatically increase your borrowing capacity. Lenders will still assess your full financial position, including income, expenses, debts, deposit, credit history and loan structure.
"For most lenders, the improved income position is usually reflected once the higher after-tax income is actually being earned and evidenced, not just announced in the Budget," Tarak said.
"Lenders will generally want to see the updated income through current pays, BAS or tax-return evidence depending on the applicant profile and lender policy."
You can use the Government's tax cut calculator to estimate how the changes may apply to you. The calculator is for Australian resident employees, so self-employed borrowers should treat it as a guide only and seek tax advice if their income comes from business, trust or mixed sources.
New 2026 changes to PAYG installments
From 1 July 2027, the Government has announced that small and medium businesses will be able to opt in to monthly reporting and PAYG instalment payments. It is also expanding access to the ATO's dynamic instalments pilot, which uses an ATO-approved calculation embedded in accounting software to calculate and vary instalments based on more up-to-date business conditions.
For self-employed borrowers, this may help make tax payments more predictable. PAYG instalments are prepayments of expected tax on business and investment income, and more regular instalments may support steadier cash flow planning over time.
What to check | Why it matters for your home loan |
|---|---|
Whether monthly PAYG instalments suit your business | More regular payments may help with cash flow planning. |
How tax payments affect savings | Predictable instalments may make it easier to plan for a deposit, repayments or offset account contributions. |
Whether your accounting software is ready | The dynamic instalments pilot uses an ATO-approved calculation embedded in accounting software. |
Lenders may review income, expenses, liabilities and account conduct when assessing your application. |
Review this with your accountant before changing how you manage PAYG instalments. If you are planning to apply for a self-employed home loan, it may also help to get in touch with an Aussie Broker early so you understand what lenders may look for in your financial records.
Before making tax or lending decisions, confirm with your accountant and an Aussie Broker so you understand how these changes may apply to your business structure and borrowing position.
Timing your self-employed home loan application
For self-employed borrowers, the application timing could affect how lenders assess income. The 2026 Budget changes make this worth checking before you apply, especially if your recent tax returns include large deductions, a loss year or changes to how tax instalments are paid.
"A strong self-employed application has clean tax returns, up-to-date financials, good BAS consistency, clear add-backs, stable business trading, and a sensible explanation for any one-off deductions," Tarak said. "The best applications are planned six to twelve months ahead with tax strategy and lending strategy aligned."
What to check before applying | Why it matters for you now |
|---|---|
Recent tax returns | If your latest return shows lower taxable income because of large write-offs or a loss year, some lenders may assess your income more conservatively. |
Major asset purchases | Claiming large deductions in the same year as your home loan application may affect your assessed income, depending on lender policy. |
Application timing | Waiting until you have lodged a return that better reflects your ongoing income may improve your position, depending on your circumstances. |
PAYG instalment planning | From 1 July 2027, monthly PAYG instalments may help some small and medium businesses manage tax payments more evenly across the year. |
Supporting documents | Clean, up-to-date financials can help lenders better understand your full income, not just one tax figure. |
Before you apply, seek advice from your accountant about the tax impact of deductions, losses and PAYG instalments. Then discuss your options with an Aussie Broker about how different lenders may assess your self-employed income, business structure and application timing.
For more details on documents, deposit requirements, low-doc options and how lenders assess self-employed borrowers, see our guide to applying for a home loan when you're self-employed.
Wondering about your options?
An Aussie Broker can help you check your borrowing power, compare lender policies and understand what documents may support your application.
How Aussie can help
Self-employed home loan applications can be more complex when recent tax changes affect your taxable income, cash flow or business financials.
An Aussie Broker can help you understand how different lenders may assess your income, compare options that suit your structure and prepare your application at the right time.
What Aussie can help with | Why it matters for you now |
|---|---|
Reviewing recent write-offs, losses and taxable income | Large deductions or a reported loss may affect how some lenders assess your borrowing power. |
Lenders assess self-employed income differently, including sole trader, company, trust and partnership structures. | |
Planning your application timing | Applying after a lower-income year may affect your options, depending on your financials and lender policy. |
Preparing the right documents | Up-to-date tax returns, financials, BAS, bank statements and accountant details can help lenders understand your income position. |
First home buyer grants, schemes and concessions may apply, but eligibility varies by state, property type, price cap and personal circumstances. | |
Exploring deposit options | If cash is tied up in business working capital, a deposit bond may be worth discussing where it is suitable and accepted by the vendor. |
Aussie can help you move from tax-time planning to a clearer lending strategy, with guidance on borrowing power, lender policy and the documents you may need.
Plan your self-employed home loan before tax changes affect your application
The 2026 budget changes may affect more than your tax return.
For self-employed borrowers, write-offs, loss years, personal tax cuts and PAYG instalment choices can all influence the income picture a lender sees.
Get your accountant’s view about your tax position, then talk to an Aussie Broker about your borrowing power, lender options and the documents that may support your application.
Alexander White, Aussie Mobile Broker, said self-employed buyers should start by building the right team around them.
"Arm yourself with the correct professionals to set out the right financial goals and then be able to enact the strategy," he said.
Tarak's advice for self-employed Australians thinking about buying in the next two years is straightforward.
"Do not leave tax and lending strategy until the last minute," he said. "If you are planning to buy property within two years, make decisions now that protect both cash flow and assessable income, because the cheapest tax outcome is not always the strongest borrowing outcome."