Labor's Negative Gearing and CGT Changes Are Now Law: How to Still Get Ahead

What Labor actually changed — and when

Two changes announced in the May 2026 Federal Budget have now passed parliament and become law. Neither starts immediately — both apply from 1 July 2027 — and, importantly, what you already own is largely protected.

Negative gearing — now limited to new builds. From 1 July 2027, if you own an established (already-built) residential investment property that you bought after 7:30pm on 12 May 2026, you will only be able to claim rental losses against your rental income or capital gains from property — not against your wage or salary. Any unused losses can be carried forward to future years. Brand-new builds are exempt and can still be negatively geared in the usual way, as can build-to-rent projects and properties held in super.

The 50% CGT discount is being replaced. For gains made from 1 July 2027, the long-standing 50% capital gains tax discount for individuals, trusts and partnerships is replaced by a system of cost-base indexation plus a 30% minimum tax on the net gain. The growth you have already built keeps the old 50% discount — only the gain from 1 July 2027 onwards falls under the new rules.

In short: the rules are tougher for future purchases of established investment properties, but there is a clear runway before they start, and existing portfolios are grandfathered.

What is NOT changing (this part matters)

It is easy to miss the good news in the headlines, so let us be clear about what these changes leave completely untouched:

• Your own home stays 100% capital-gains-tax-free. The main residence exemption was not touched.
• The 6-year rule is intact (more on this below) — a genuinely powerful tool that survived the budget unchanged.
• Anything you already own is grandfathered — bought before 7:30pm on 12 May 2026, your negative gearing and CGT treatment do not change.
• New builds can still be negatively geared, keeping the door open for investors who buy the right type of property.
• Super stays as-is for capital gains purposes.

Where the market sits right now — June 2026

These tax changes land into an already-cooling market. In June the Reserve Bank held the cash rate at 4.35%, after lifting it three times earlier in the year to get on top of stubborn inflation. Most economists expect rates to hold for a while yet, with the major banks split on when the first cut actually comes.

In Sydney, prices have come off the boil. Cotality (formerly CoreLogic) has the median dwelling value at around $1.28 million, down roughly 0.9% over the month and about 2.1% below the November 2025 peak. Houses are softening faster than units, sales volumes are down around 17% on a year ago, and there is more stock on the market than usual.

Here is the part most headlines skip: a slower market with more choice and less competition is exactly the environment where a prepared buyer gets ahead. Vendors are more negotiable, you have time to do proper due diligence, and you are not bidding against ten other people at auction. A sharp crash is not the central forecast — tight housing supply and steady population growth are holding a floor under prices — but the urgency has come out of the market, and that is leverage for buyers.

So how do you still get ahead? Five plays

The headline changes are real, but they do not close the door on building wealth — they just reward being deliberate. Here are five strategies worth a conversation.

1. Make your own home your biggest tax-free win

With the main residence exemption untouched, your own home is now arguably the most tax-effective asset you can own — every dollar of growth is yours, capital-gains-tax-free. That makes buying well more important than ever: a quality home in a well-located, supply-constrained suburb that grows steadily over time. This is where my background helps — before broking I spent years in construction, so when we walk through a purchase I am looking past the styling at the build quality, the layout and the things that quietly add (or destroy) value. Buy an owner-occupied home that grows, and the tax system is firmly on your side.

2. The 6-year rule: a legal way to sell an old home tax-free

This one survived the budget and deserves the spotlight. The 6-year rule (the ATO main-residence absence rule) lets you move out of a home that was genuinely your main residence, rent it out for up to six years, and still sell it capital-gains-tax-free — provided you do not claim another property as your main residence over that period. If you move back in before the six years are up, the clock can reset. It is one of the most valuable provisions still available to everyday Australians, and it can turn a former home into a tax-free sale years down the track.

A word of caution: the detail matters here — tax residency, timing, and whether you are nominating another main residence all affect the outcome. Speak to your accountant before relying on it so it is applied correctly to your situation. If you do not have one, I am happy to point you to people I trust.

3. Keep investing — just be smarter about how

A change to the rules is not the same as the end of property investing. A few things worth keeping in perspective:

• The changes do not start until 1 July 2027. There is a genuine window, and an investment made now still plays out under today rules for a long time.
• New builds are exempt from the negative gearing change — so investors who focus on new and build-to-rent stock keep the same tax treatment they have today.
• Tax settings are political, and they move. Negative gearing and CGT have been debated, changed and walked back more than once over the decades; what is law today can shift with the political cycle. Plenty of long-term investors are choosing not to let a rule that starts two years out derail a 20-year plan.

None of this is a reason to rush — it is a reason to be strategic about what you buy and how you hold it. The investors who do well from here will be the ones who plan around the rules rather than panic about them.

4. Build income beyond property: start a business

Property is one path to wealth, not the only one. If these changes have you rethinking where your next dollar of growth comes from, starting or buying a business is worth serious thought. A profitable business can build income and equity that is not tied to property tax settings at all — and, done right, it can also strengthen your borrowing position over time. As a broker who works with self-employed clients every day, I can tell you how lenders actually read business income, what they want to see, and how to keep your finances loan-ready as you grow. Diversifying how you earn is one of the most underrated ways to get ahead.

5. Get the structure — and the advice — right

How you hold an investment can matter as much as what you buy. Companies and trusts can offer benefits around asset protection and the flexibility to distribute income — but they also come with extra cost, complexity and trade-offs, and it is worth knowing that the new CGT rules apply to trusts and partnerships too, so a structure is not a magic way around them. This is firmly financial-adviser and accountant territory — not something to copy from a mate or a forum. Talk to a licensed financial adviser about an investment strategy that fits your goals, and get an accountant view on structuring. We work alongside good people in both fields, so if you would like an introduction, just ask.

The bottom line

Labor negative gearing and CGT changes are now law, but they start in 2027, your existing investments are protected, and your own home and the 6-year rule remain powerful, tax-free tools. Add a softer, more negotiable market and there is a clear path forward for buyers who plan ahead.

If you would like to talk through what all this means for your situation — whether that is buying your first home, your next investment, refinancing, or getting loan-ready to start a business — I am happy to have a free, no-obligation chat. With access to more than 70 lenders, I can quickly tell you where you stand.

This is general information only and not personal financial, tax or legal advice — everyone situation is different. Please speak with a licensed financial adviser, accountant or your broker before acting, and get in touch if you would like us to point you in the right direction.

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