The 2026-27 Federal Budget, decoded for your decisions

The big one: negative gearing & CGT reform

This is the most consequential budget for property investors in a generation. Two structural changes, both starting 1 July 2027:

• Negative gearing limited to new builds. From 1 July 2027, rental losses on established properties can only be deducted against residential property income (not wages/salary), with excess losses carried forward. Losses on new builds remain fully deductible against all income.
• CGT discount replaced. The 50% capital gains tax discount is replaced with an inflation-adjusted indexation method plus a minimum 30% tax rate on gains, from 1 July 2027. It applies only to gains accruing after that date. Investors in new builds may elect to keep the existing 50% discount.

Crucial detail — grandfathering: properties held on or before Budget night (12 May 2026) are fully grandfathered under the existing rules. If you already own an investment property, or contract one on or before that date, the old negative gearing and 50% CGT discount rules continue to apply to it.

Also: the foreign-buyer ban on established homes was extended to mid-2029.

What this means for our property tools: the property investment cash-flow calculator models the currentrules, which remain correct for any property you buy now (grandfathered). For purchases of established property settling after 1 July 2027, the negative gearing offset shown will overstate the after-tax benefit — we'll ship a 2027-rules toggle closer to the date once the legislation is final.

Going deeper: negative gearing explained (mechanics + worked example + the 2027 change) and capital gains tax on property (the 50% discount, the main-residence exemption, and the indexation reform).

First home buyers & housing

• $47bn+ total housing commitment, the headline number across the housing package.
• $5.9bn to states and territories toward 100,000 homes reserved for first home buyers (~$2bn grants, ~$8bn concessional loans, states matching ~$2bn). Construction starts in 2026-27.
• $2bn Local Infrastructure Fund for enabling infrastructure (water, sewerage, roads) supporting up to 65,000 homes over 10 years.
• Help to Buy shared-equity scheme referenced as proceeding; build-to-rent tax incentives continued.

Relevant tools: First Home Super Saver calculator (no announced change to FHSS in this budget — the existing $50,000 cap rules stand) and the stamp duty calculator (stamp duty is a state tax — unaffected by the federal budget).

Personal income tax

• The bottom rate drops to 15% from 1 July 2026, then 14% from 1 July 2027. Important nuance: this is an already-legislated cut (from the previous budget cycle), reaffirmed here — not a new 2026-27 measure. The $18,201–$45,000 bracket rate falls 16% → 15% → 14% over two years; thresholds unchanged.
• New: Working Australians Tax Offset (WATO) — up to $250/year, ongoing, from 2027-28. Roughly 13 million workers; lifts the effective tax-free threshold to ~$19,985 (or ~$24,985 with the low-income tax offset).
• New: instant work-related expense deduction of up to $1,000 from 2026-27 — claim up to $1,000 of work expenses without receipts (~6.2 million workers, average benefit ~$205 in 2026-27).
• Medicare levy low-income thresholds were increased. We're not publishing specific 2026-27 threshold figures — we couldn't verify them to a primary source at time of writing. Check the ATO for the gazetted numbers.

Relevant tool: the income tax calculator already reflects the legislated 15% bottom rate for the 2026-27 year.

Home energy & solar

• $27.7m for reforms so consumer energy resources — rooftop solar, household batteries, EVs — can participate directly in the energy market and unlock savings.
• $1.8mfor “one-click” energy plan switching (stopping auto-rollovers to higher-cost plans), plus $20.7m for a bolstered Australian Energy Infrastructure Commissioner.
• Reforms letting household solar/battery systems participate in the market, projected to save ~$7bn in system costs by 2050.