CGT and Negative Gearing Changes Clear Lower House — What Property Investors Must Do Now

Australia's parliament has taken a decisive step on property taxation, with the lower house passing the first tranche of federal budget measures — including changes to the capital gains tax (CGT) discount and negative gearing rules. For property investors, particularly those relying on flexible financing, the message is clear: the landscape is changing, and preparation is no longer optional.

What Passed the Lower House

The legislation, which cleared the House of Representatives this week, includes:

• Changes to the CGT discount for investment properties held by individuals
• Negative gearing reforms that limit the ability to offset rental losses against other income for newly purchased investment properties
• These measures form the first tranche of the Albanese government's 2026–27 budget housing package

The bills now proceed to the Senate, where their passage remains uncertain but politically likely given the government's majority.

What This Means for Property Investors

For investors currently holding or planning to acquire residential property, these changes represent a genuine shift in after-tax returns:

The practical consequence: investors will need stronger cash flow positions and may reassess their financing structures before the measures take full effect.

Non-Bank Finance in a Post-Reform Environment

One of the less-discussed implications of these changes is their impact on borrowing capacity. As tax benefits reduce, net rental yields become the primary justification for investment — which means loan serviceability calculations will tighten for many investors.

Non-bank lenders like MPFG Capital offer financing structures that are assessed on the property's income-generating potential and the borrower's overall financial position, rather than relying solely on tax-benefit-inflated income scenarios. For self-employed investors and those with complex income structures, this approach can remain viable even as the tax environment shifts.

What Investors Should Do Now

1. Review your holding structure — trust, company, or individual ownership each has different CGT implications
2. Assess loan serviceability without tax offsets — ensure your portfolio can service debt on rental income alone
3. Consult your accountant on how the specific measures apply to your current and planned properties
4. Explore financing options early — pre-approvals and formal assessments take time; don't wait for Senate passage

The Senate is expected to consider the measures in coming weeks. Whether it passes in its current form or with amendments, investors who have stress-tested their position will be better placed regardless of the final outcome.

This article is general information only and does not constitute financial, tax or legal advice. Please consult a qualified professional for advice specific to your circumstances.