Given the current news cycle and the significant discussion surrounding Tuesday night’s 2026 Federal Budget delivered by Jim Chalmers, we thought it would be worthwhile to provide our balanced understanding and commentary surrounding the proposed changes and what they may mean for property owners, landlords and investors moving forward.
Over the past 48 hours there has been extensive media commentary surrounding changes to Negative Gearing, Capital Gains Tax and Trust structures. Whilst we expect further information, explanatory material and formal fact sheets to become available over the coming days and weeks, we believe it is important to provide our current understanding of the proposed reforms and the potential impact on the broader South East Queensland property market.
Importantly, we do not purport to provide financial, taxation or legal advice. The commentary below is general in nature and should not be relied upon as personal advice. We strongly encourage landlords and investors to speak with their accountant, financial adviser or solicitor to understand how these proposed changes may apply to their individual circumstances and Sam Devlin, Co- Managing Director Harcourts Property Centre, is available to chat, if you would like to book a call in with Sam, please click here.
Existing Landlords – Investment Properties Owned Prior to 12 May 2026, 7:30pm
Negative Gearing
Owners who held investment properties prior to 7:30pm on 12 May 2026 are expected to retain access to the current negative gearing framework under the proposed grandfathering provisions.
This means investment property losses should continue to be claimable against personal taxable income in line with the current arrangements.
Capital Gains Tax (CGT)
From a Capital Gains Tax perspective, the proposed framework effectively creates two separate assessment periods:
- Any capital gain accrued between the original purchase date and 1 July 2027 is expected to continue to be assessed under the current CGT framework, including the existing 50% CGT discount for assets held longer than 12 months.
- Any capital growth occurring after 1 July 2027 may instead be assessed under the proposed indexed cost-base methodology replacing the current 50% discount framework.
Accordingly, future CGT calculations may require an apportionment between the current and proposed methodologies depending on the ownership period and timing of disposal.
New Investors Purchasing Property From 12 May 2026, 7:30pm
Negative Gearing
Under the proposed reforms, investment properties purchased between now and 1 July 2027 may still access current negative gearing arrangements.
However, from 1 July 2027 onwards, negative gearing benefits for established residential property are proposed to become more limited, with the Government signalling an intention to primarily incentivise investment into newly constructed dwellings and additional housing supply.
Broadly speaking, losses generated from established residential investment properties may no longer be deductible against PAYG wages or unrelated income in the same way they currently are. Instead, those losses may be quarantined and carried forward to offset future residential property income or relevant capital gains.
This distinction may significantly alter investor cashflow considerations moving forward. For higher income or higher net worth investors capable of sustaining short-term holding losses, the long-term impact of these proposed changes may ultimately be less severe than initially perceived.
Capital Gains Tax (CGT)
Similarly, any capital gains accrued up until 1 July 2027 are expected to continue benefiting from the current 50% CGT discount methodology.
Capital growth occurring after this date may instead be assessed under the proposed indexed cost-base methodology.
Importantly, the proposed reforms appear to provide concessions for investments which materially contribute to increasing housing supply. Newly constructed dwellings may continue to retain access to more favourable taxation treatment moving forward.
Existing Owners of Pre-19 September 1985 Assets
Negative Gearing
Current negative gearing arrangements are proposed to remain unchanged.
Capital Gains Tax (CGT)
Historically, assets acquired prior to 19 September 1985 have generally remained exempt from Capital Gains Tax.
Under the proposed reforms, however, pre-CGT assets may become subject to CGT on gains accruing after 1 July 2027, assessed under the proposed new methodology upon eventual disposal.
If implemented, this would represent one of the most significant structural changes to long-held property assets seen in decades.
Trust Structures – Proposed Minimum 30% Tax Rate
One of the more significant proposed reforms relates to Trust structures.
From 1 July 2028, discretionary trusts may become subject to a minimum effective tax rate of 30% on taxable income distributed through the Trust structure.
If implemented, this may materially alter the historical taxation advantages associated with discretionary Trusts, shifting their primary purpose more toward asset protection and succession planning rather than income distribution flexibility or tax minimisation strategies.
Retirees and lower-income beneficiaries who have historically benefited from income splitting arrangements may be among the cohorts most impacted under the proposed reforms.
What Could This Mean for the Queensland Property Market?
A common theme emerging from commentary following the Budget is the view that “you cannot tax your way out of a housing crisis.”
For owners, investors and buyers across South East Queensland, this may ultimately be the most important consideration moving forward.
South East Queensland continues to experience exceptionally strong population growth driven by both interstate and international migration. Whilst the Government’s proposed reforms are clearly designed to encourage additional housing supply through targeted taxation incentives, the broader challenge remains unchanged:
Demand continues to materially outpace supply. Importantly, this Supply vs Demand constraint exists within both a Sales and Rental context.
In our opinion, the current reforms do little to immediately solve the underlying structural issue facing the Queensland housing market — namely, that there are simply not enough homes being built to accommodate current and projected population growth.
Accordingly, whilst some of the proposed taxation changes may reduce investor participation or alter buyer behaviour in the short term, the longer-term fundamentals underpinning the Queensland property market remain extremely strong.
Our View
Whilst some of the proposed reforms may not necessarily be favourable for all investors, we believe the broader South East Queensland property market remains exceptionally well positioned for long-term capital growth.
The reason is simple:
The Budget has not materially solved the underlying supply crisis.
As long as population growth continues to outpace housing delivery, pressure on property values and rental markets is likely to remain.
Of course, no one has a crystal ball, and markets will always experience cycles, fluctuations and periods of uncertainty. However, whilst the underlying housing supply issues across South East Queensland remain unresolved, we remain steadfast in our long-term optimism surrounding the Queensland property market.
History has consistently shown that markets with strong population growth, constrained supply and desirable lifestyle fundamentals tend to perform strongly over extended periods of time — and in our opinion, South East Queensland continues to exhibit all of those characteristics.
If you would like to discuss your specific property or broader market conditions in greater detail, our team would be happy to assist.
Again, whilst we do not provide financial, taxation or legal advice, we are happy to discuss the broader market implications and connect you with appropriately qualified professionals who can provide advice tailored to your personal circumstances.
