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Federal Budget 2026: What the Proposed Property Changes Could Mean

Federal Budget 2026: What the Proposed Property Changes Could Mean for Perth Property

The Federal Government’s 2026 Budget has introduced some of the most significant proposed property tax reforms Australia has seen in decades.

The announcements have already generated strong reactions across the property industry, investors, economists and political parties, particularly around proposed changes to negative gearing and Capital Gains Tax (CGT).

While debate continues around the long-term impact, the Government says the reforms are designed to improve housing affordability and encourage greater investment into new housing supply.

What are the proposed changes?

The key property-related proposals include:

• Negative gearing to be limited to newly built properties from 2027
• Changes to the current 50% Capital Gains Tax discount
• Existing investment properties expected to be “grandfathered”
• A new minimum tax rate on discretionary trusts

In simple terms, the Government is aiming to redirect investor demand toward new housing construction while helping more Australians enter the property market.

What could this mean for the property market?

At this stage, there are differing views on how the reforms may affect housing prices, rents and investor activity.

Some economists believe the changes could improve home ownership opportunities for younger Australians over time, while others argue reduced investor demand may place additional pressure on rental supply.

One thing that remains unchanged, however, is Australia’s underlying housing supply challenge.

Population growth, limited housing stock, tight rental markets and ongoing construction constraints continue to support long-term demand for quality property across many parts of the country.

What could this mean for existing property owners?

Current reporting suggests existing investment properties may retain current CGT treatment on gains accrued before the reforms commence. However, future gains after the implementation date may potentially be taxed under the new system.

Importantly, final legislation and transition arrangements are still to be confirmed.

For many existing property owners, particularly long-term holders, understanding how these changes may apply personally will likely require professional taxation and financial advice.

A simple example

Imagine you purchased an investment property 20 years ago for $1.5 million and today it is worth $4 million.

Under the current system, investors may receive a 50% Capital Gains Tax discount when they sell, significantly reducing the taxable portion of the gain.

Under the proposed changes, gains accrued before the reforms commence may potentially retain current treatment, while future growth after the implementation date could fall under the new system.

Importantly, the exact transition rules are still being finalised.

For owner-occupiers, the family home generally remains exempt from Capital Gains Tax under current policy settings.

What could this mean for Perth?

Perth continues to operate differently to many eastern states markets.

The Western Australian market remains heavily influenced by limited housing supply, strong population growth and comparatively low listing numbers — particularly across established Western Suburbs locations.

While policy changes may influence investor behaviour nationally, local market fundamentals remain critically important when assessing long-term property decisions.

Perth’s relative affordability compared to Sydney and Melbourne, combined with ongoing supply constraints, continues to underpin demand across many sectors of the market.

A market that continues to evolve

Property markets have always adapted to changing interest rates, lending policies, taxation rules and economic cycles.

For buyers, sellers and investors, periods of policy change are often less about reacting emotionally and more about understanding how the landscape is shifting.

As always, quality property, strong locations and long-term thinking remain key fundamentals.

If you would like to discuss how the proposed Budget changes may affect your property plans, the team at Shellabears is always happy to help.

Disclaimer: This article is general information only and does not constitute financial, taxation or investment advice. Independent professional advice should be sought before making any property or investment decisions.

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Disclaimer: This article contains general commentary only and does not constitute financial, investment, legal, or taxation advice. Readers should seek independent professional advice tailored to their individual circumstances before making any property or investment decisions.