Many of our office’s Landlord/investor clients have been contacting us following the 2026-2027 Budget announced Tuesday 12/5/26, asking what the proposed Federal tax reforms could mean for their long-term property ownership. This is particularly important for those who have held assets for decades, including PRE-1985 properties that were previously CGT exempt. There’s a lot to unpack…
Below is a simplified breakdown based on the information given on Tuesday 12/5/26.
IMPORTANT: These are proposed reforms only at this stage and full legislation/details are still to be confirmed.
KEY CHANGES BEING REPORTED
THE CURRENT 50% CGT DISCOUNT TO END FOR FUTURE GAINS
Under the current system: If you hold an investment asset longer than 12 months, you generally receive a 50% CGT discount.
Under the proposed system: Future gains accrued after 1 July 2027 may no longer qualify for the 50% discount. Instead, only an inflation/indexation adjustment may apply.
This could significantly increase the taxable portion of future capital gains.
ASSETS TO BE RE-VALUED AT 1 JULY 2027
Properties and assets to effectively receive a “reset valuation” as at 1 July 2027.
This means: Growth in value BEFORE 1 July 2027 may continue under existing rules. Growth in value AFTER 1 July 2027 will fall under the new tax regime.
PRE-1985 CGT-EXEMPT ASSETS NO LONGER TO REMAIN FULLY EXEMPT
One of the most significant reported changes is that PRE-1985 assets (which historically sat outside the CGT system entirely) may now become taxable moving forward.
This has created concern for: • Long-term family investors • Elderly Australians • Family trusts • Intergenerational property holders • Farming families • Small business owners.
Many Australians purchased these assets decades ago relying on the understanding they were permanently exempt from CGT.
A MINIMUM 30% TAX RATE ON FUTURE CAPITAL GAINS IS BEING DISCUSSED
Reports suggest future gains may be subject to a minimum effective tax rate of 30%.
In simple terms: Future capital gains may be taxed far more heavily than under today’s rules.
NEGATIVE GEARING APPEARS TO BE GRANDFATHERED FOR EXISTING INVESTORS
Current reporting suggests:
Existing investment properties already owned before the commencement date may retain existing negative gearing treatment.
However, future purchases of established/second-hand investment properties after the commencement date may no longer qualify.
Only newly built properties may retain full deductibility treatment.
WHAT THIS COULD MEAN FOR INVESTORS
If implemented in their current form, these reforms could fundamentally reshape long-term property investment in Australia.
Potential impacts may include:
- Investors reassessing future acquisitions
- Increased focus toward brand-new developments
- More complexity around estate planning and succession
- Increased importance of professional tax structuring advice
- Potential changes in holding strategies for long-term assets
- Greater caution around future investment decisions
For many Australians, investment properties were never about speculation.
They were built: slowly, over decades, through sacrifice, risk, discipline, and long-term planning.
Many owners made decisions based on taxation systems that had existed for generations.
These proposed reforms, if fully implemented, would represent one of the largest structural changes to property taxation in modern Australian history.
As always, I strongly recommend investors to: remain calm, wait for final legislation and detail, and seek independent accounting and financial advice specific to their circumstances.
I will continue monitoring the proposed reforms closely and provide updates as more detail becomes available.
