Australia's Negative Gearing and CGT Reforms: What Property Investors and Borrowers Need to Know

The Australian government's 2026–27 Federal Budget introduced the most significant property tax changes in decades. Labor has proposed new restrictions on negative gearing and an increase to the capital gains tax (CGT) discount, while the Coalition has pledged to reverse these reforms if elected. For property investors and borrowers, the policy uncertainty itself is reshaping decisions in today's market.

What the Budget Actually Proposes

The Albanese government's housing tax package limits negative gearing to one investment property for new purchases (existing arrangements are grandfathered), and reduces the CGT discount for investment properties from 50% to 25%. The measures are designed to cool investor competition in an overheated housing market and improve owner-occupier access.

According to analysis from The Adviser, these measures could reduce borrowing appetite among high-income investors who relied on negative gearing as part of their investment strategy.

The Coalition's Counter-Position

Opposition Leader Angus Taylor has promised to scrap Labor's CGT and negative gearing reforms if the Coalition wins government. This creates a genuine policy fork: investors holding properties purchased before any election may be shielded under grandfathering rules, while those considering new purchases face real uncertainty about the rules that will apply at sale.

What This Means for the Property Finance Market

The policy debate is having a measurable effect on investor behaviour. Some borrowers are accelerating purchase decisions to lock in properties under current rules; others are pausing to assess the political outcome.

For self-employed investors and those with non-standard income documentation, the window to act may be narrower. Traditional bank lending timelines are often too slow to respond to rapidly changing market conditions. Non-bank lenders can typically provide faster pre-approval and settlement, allowing borrowers to move when timing matters.

Non-Bank Lending and Property Investment

Non-bank lenders such as MPFG Capital are not subject to the same internal credit rationing that causes major banks to tighten investor lending during volatile policy environments. Whether the tax rules change or not, MPFG's alt doc loan products and commercial property financing remain structured around the borrower's actual financial position — not a rigid income-documentation requirement.

For investors who are self-employed, operate through trusts or companies, or have income structures that don't neatly fit a bank payslip, non-bank financing provides a practical pathway regardless of what happens in Canberra.

Key Takeaways

• Labor's budget proposes capping negative gearing to one investment property (new purchases) and reducing the CGT discount from 50% to 25%
• The Coalition has pledged to reverse these changes, creating ongoing policy uncertainty
• Investors with complex income structures or self-employment may find non-bank lenders better positioned to act quickly
• MPFG Capital offers alt doc and commercial property loan options for investors who don't meet major bank documentation requirements

This article is for informational purposes only and does not constitute financial or tax advice. Speak with your accountant and a licensed credit adviser before making property investment decisions.