Mawer Money: with Greg Mawer

Fundamental reforms to the property taxes

26 May 2026

Replacing the 50% CGT discount with indexation

From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains.

These changes will apply to all assets, including pre-CGT assets, held by individuals, trusts and partnerships.

Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains accruing on or after 1 July 2027. The 50% CGT discount will continue to apply to gains that accrued before 1 July 2027.

Capital gains on pre-CGT assets that accrued before 1 July 2027 will remain exempt from CGT.

Furthermore, investors in new residential properties will be able to choose either:

• the 50% CGT discount; or

• cost base indexation and the 30% minimum tax.

Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.

Assets that are sold prior to 1 July 2027 will continue to be subject to the existing rules.

Foreign resident CGT regime

The Government will provide a time-limited, targeted concession in the foreign resident CGT regime for investment in the renewables sector.

The transitional arrangement will apply to foreign investors disposing of certain renewable energy infrastructure assets from commencement, being the first day of the next quarter after Royal Assent until 30 June 2030.

Reforming negative gearing for residential property investments

From 1 July 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and are able to be offset against residential property income in future years.

These changes will apply to established residential properties acquired from 7:30 PM (AEST) on 12 May 2026. Properties acquired prior to this time (including contracts entered into but not yet settled) will be exempt from the changes until disposal.

Eligible new builds will be exempt from the changes.

Properties in superannuation funds and widely held trusts will be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing programs.

Source: Greg Mawer

Editor: Please contact our office if you require assistance regarding the above, including in relation to also claiming deductions for improvement costs for certain assets.