The 2026 Federal Budget & What It Means for Property

The 2026 Federal Budget introduced major proposed changes to property taxes, housing affordability, and buyer support schemes.

Whether you already own property, are looking to buy your first home, or are investing, these changes could impact your future decisions.

Important: The changes announced in the Federal Budget are still proposed and must pass Parliament before becoming law.

Owner Occupiers

If You Own & Live In Your Home

Good news, the proposed property tax changes do not affect your primary residence. The family home CGT exemption remains unchanged, meaning owner-occupiers are not directly impacted by the investor tax reforms.

Tax Cuts & Borrowing Power

From 1 July 2026, income tax rates will reduce again for lower and middle-income earners. This means many Australians could keep more of their pay each year, which may help improve borrowing power when applying for a home loan. More take-home pay may help increase borrowing capacity, depending on your income, debts, living expenses, and lender requirements.

Combined with easing inflation and possible interest rate relief, conditions for buyers may improve over the next 12–18 months.

Help to Buy Scheme Expanded

The government has expanded the Help to Buy scheme with an extra $800 million in funding.

Eligible buyers may be able to purchase a home with a smaller deposit, with the government contributing:

• Up to 40% for new homes

• Up to 30% for existing homes

Income limits and property price caps have also increased, allowing more Australians to qualify for the scheme.

Foreign Buyer Ban Extended

The temporary ban on foreign buyers purchasing existing Australian homes has been extended until 30 June 2029.

The aim is to reduce competition on established homes and improve opportunities for local buyers.

Property Investors

The Important Date Investors Need to Know

The key date announced in the budget is:

7:30pm AEST — 12 May 2026 (Budget Night)

Properties purchased before this time are expected to remain under the current tax rules.

Properties purchased after this time may fall under the proposed new negative gearing rules if the legislation passes Parliament.

Negative Gearing Changes

Currently, investors can generally claim rental losses against their wages or other income. This is known as negative gearing.

Under the proposed changes:

• Existing investment properties are largely protected

• Newly built properties keep full negative gearing benefits

• Established properties purchased after Budget night may no longer allow rental losses to be offset against wages

Instead, those losses may only be used against future property income or capital gains.

This could reduce the short-term tax benefits for some investors buying established homes.

Capital Gains Tax (CGT) Changes

The government has also proposed changes to the current CGT discount system.

At the moment, investors who hold a property for more than 12 months generally receive a 50% CGT discount when they sell.

From 1 July 2027, the government has proposed replacing the current system with:

• Cost base indexation (adjusting for inflation)

• A minimum 30% tax rate on capital gains

Importantly:

• The main residence exemption is not changing

• Existing gains before 1 July 2027 are expected to remain under the current system

If these changes become law, investors may need a property valuation from 1 July 2027 to help calculate how capital gains are taxed under the new rules.

What This Could Mean for Investors

The proposed changes may make:

• Existing investment properties more valuable to hold long term

• New builds more attractive to investors

• Established investment properties less tax effective in the future

Some analysts also believe the proposed negative gearing changes could increase holding costs for certain investors, especially highly leveraged buyers.

Because of this, investors should carefully review their strategy before making any major decisions.

Housing Supply & Infrastructure

The government is also investing more money into housing infrastructure and faster building approvals to help increase housing supply over time.

This includes funding for:

• Roads and utilities for new housing estates

• Faster planning approvals

• Modular and prefabricated housing construction

The goal is to help increase the number of homes being built across Australia.

The Bottom Line

This budget could change how many Australians buy and invest in property, especially investors purchasing established homes after Budget night.

For owner-occupiers:

• Tax cuts may improve borrowing power

• More support is available for first-home buyers

• Your family home remains exempt from CGT changes

For investors:

• Existing properties are largely protected under current rules

• New builds may become more attractive

• Buying established investment properties could become less tax effective in the future

Because these changes are still proposed and may change before becoming law, it’s important to get professional financial and tax advice before making any major property decisions.

Not Sure What This Means For You?

Property decisions are becoming more complex, especially with potential tax changes on the horizon.

At Acquired Buyers Advocacy, we help buyers make informed property decisions with clarity and confidence.

Get in touch with Acquired Buyers Advocacy today.

Sources: Australian Government Budget 2026–27, Treasury Budget Papers, Deloitte Federal Budget Analysis, Commonwealth Bank Housing Outlook, AHURI Federal Housing Measures Brief.

This article is general information only and does not constitute financial, tax, or legal advice. All proposed measures are subject to parliamentary approval.