If you have no intention of ever investing in property, then these Budget changes are unlikely to affect you.
Many of my clients simply want to buy a home, raise a family, and perhaps upgrade or relocate over time, while using employer superannuation to help protect their future.
For owner-occupiers, very little changes.
When you move house:
- Your family home remains exempt from capital gains tax.
- The main costs are still agent fees when selling, and stamp duty when buying.
If You Already Own Investment Property
There is one proposed change to be aware of from 1 July 2027:
- You may need to obtain a market valuation of your investment property, as the calculation method for capital gains tax is proposed to change from that date.
If You’re Planning to Invest in the Future
There are two key proposed changes:
- Losses created when rental income falls short of costs such as interest, repairs, and management fees will need to be carried forward and offset against future investment income or gains.
- However, if you purchase a brand-new property, you may still be able to deduct those losses against your PAYG income.
In addition:
- Capital gains tax would be calculated on the gain after allowing for inflation indexing.
What Do These Changes Actually Mean?
- Borrowing power for investment purchases is likely to reduce because the tax benefits of negative gearing against PAYG income are being restricted.
- Unless you buy new property, such as:
- off-the-plan apartments near city centres, or
- house and land packages in growth corridors
As for capital gains tax:
- It only applies when you sell.
- If you’re investing for the long term, I personally don’t see the capital gains changes as the deciding factor in whether someone should invest or not.
Are These Changes Certain?
Not yet.
- The proposals still need to pass through Parliament and may be modified before becoming law.
- If a Liberal government is elected in future, they have indicated they would seek to reverse the changes.
Final Thoughts
If you are considering investing in property, buying new remains the clearest and lowest-risk pathway under the proposed rules, because it is currently the one area where both sides of politics broadly agree.
And despite some of the headlines floating around lately, the changes are not as dramatic as many people are suggesting.
What many Australians are understandably frustrated by, however, is the clear contradiction between what was said before the election and what is now being proposed afterwards.
If you’d like to discuss your investment plans, please reach out.
That’s what I’m here for.