Every Budget brings a bit of theatre, and this one has certainly given the property market something to talk about.
The headline version is pretty simple: tax settings for property investors are changing. But, as usual, the interesting part is in the detail — and the detail matters here, especially for anyone looking at land, construction or new residential property.
Much of the early commentary has focused on the limitation of negative gearing and the replacement of the 50% capital gains tax discount. That’s true for many established investment properties under the proposed changes, but it’s not the full story.
The Budget papers make a pretty clear distinction between established property and new housing supply. In other words, the Government isn’t just changing investor incentives — it’s trying to redirect them.
And for investors considering a new build, that distinction could be very important.
Why New Builds May Become More Strategic for Investors
The recent Federal Budget has introduced proposed changes to both negative gearing and capital gains tax, with the aim of shifting investor activity away from established housing and toward new supply.
For established residential investment properties, the changes are significant. From 1 July 2027, rental losses on affected established properties will no longer be deductible against salary, wages or other non-property income. Instead, those losses will generally be quarantined to residential property income and residential capital gains.
That means negative gearing is not being removed entirely, but it is being narrowed for established properties purchased after the relevant Budget timing rules.
Capital gains tax is also changing. The current 50% CGT discount for individuals, trusts and partnerships is proposed to be replaced with cost base indexation and a 30% minimum tax on net capital gains from 1 July 2027.
Put simply, instead of automatically discounting the gain by 50%, the system will look more closely at the inflation-adjusted gain, while ensuring a minimum tax outcome applies.
But this is where the new build distinction becomes important.
The Budget papers state that investors in new residential properties will be able to choose either the existing 50% CGT discount or the new indexation and minimum tax method when they sell.
That is a meaningful carve-out.
It means eligible new builds appear to retain more flexibility than established investment properties under the proposed rules. Investors in new builds may still be able to access negative gearing, and they may also have the choice of CGT treatment on sale.
From a policy perspective, the direction is pretty clear: the Government still wants private investment going into new housing supply.
What this means for land-and-build investors
For investors considering a house-and-land package, the Budget may strengthen the case for new construction. A genuine new build already has several practical advantages: newer homes often come with lower early maintenance, stronger depreciation profiles and strong tenant appeal. Under the proposed Budget changes, that new-build position may become even more attractive compared with established property.
That does not mean every new build automatically becomes the right investment. The usual fundamentals still matter: location, rental demand, cash flow, construction timing, borrowing capacity and long-term strategy. The measures also still need to be legislated, so there will be details to work through around eligibility, timing and how the rules apply in practice.
But the direction of travel is clear. Established property investment is being tightened, while new housing supply is being encouraged.
And for investors looking at land and construction, that could make the conversation around building new even more important.
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