What The Proposed Federal Budget Changes May Mean For Property Investment Moving Forward
Watch our latest YouTube 17 May 2026 video here https://youtu.be/a6xydM7qAQY
The recent Federal Budget may end up becoming a major turning point for Australian property investors.
While many headlines focused on tax relief and cost of living measures, some of the proposed changes quietly point toward a much bigger shift happening behind the scenes.
At this stage, these are proposed measures only. Nothing has become law yet, and there is still a legislative process ahead before any of these changes take effect.
However, if the proposals proceed in a similar form, the direction is becoming clearer:
👉 Government policy appears increasingly focused on encouraging the construction of new housing supply.
For investors, buyers, and families planning ahead, understanding this early could become extremely important.
Important: These Measures Are Not Yet Law
Before making any property or investment decisions, it is important to understand that the Budget announcements are currently proposals only.
The measures discussed below still need to pass through Parliament and may change before any final legislation is introduced.
This newsletter is not intended to create fear or urgency.
Instead, the goal is to help our clients better understand:
• What was proposed
• Why the market is discussing it
• How it may influence future investor behaviour
• Why new housing supply is receiving increased policy attention
1. Proposed Changes To Negative Gearing
One of the most discussed proposals relates to negative gearing.
Under the current system, investors who purchase a negatively geared property can generally offset losses against their wage income and other taxable income.
The Budget announcement proposes that, from 1 July 2027:
• Newly constructed properties would continue to allow full negative gearing deductions against wages and other income.
• Established residential properties purchased after 12 May 2026 may no longer allow losses to be offset against salary income.
Instead, those losses may only be used against future property income or capital gains.
Importantly:
• Existing investment properties purchased before the proposed cut-off date are expected to remain under the current rules.
• Negative gearing itself is not proposed to disappear.
The key discussion point is that the policy appears designed to encourage investment into newly built housing rather than existing homes.
2. Proposed Capital Gains Tax (CGT) Adjustments
Another major proposal involves changes to capital gains tax treatment.
The Budget outlines a possible move away from the traditional 50% CGT discount structure for many assets held longer than 12 months.
Instead, the proposal discusses:
• Indexation of the asset cost base
• A minimum 30% tax on real capital gains
The discussion extends beyond property and may also impact:
• Shares
• Business assets
• Other capital investments
The family home exemption is proposed to remain unchanged.
There is also discussion that newly built properties may retain access to more favourable CGT treatment options compared to some established property investments.
If implemented, this could further increase the attractiveness of new construction projects and house & land opportunities.
3. Proposed Changes To Discretionary Trusts
The Budget also included discussion around discretionary (family) trusts.
One proposal suggests introducing a minimum 30% tax rate on the taxable income of many discretionary trusts from 1 July 2028.
Certain exemptions are expected to apply, including some farming structures, superannuation funds, and deceased estates.
The Government also indicated there may be transition and restructuring relief available to assist affected individuals and businesses.
For investors currently using discretionary trusts as part of long-term property planning, this is an area that should be carefully monitored with professional tax advice.
Why The Focus Appears To Be Shifting Toward New Housing
When the broader policy settings are viewed together, a pattern begins to emerge.
In addition to the tax proposals, the Government also announced:
• Additional infrastructure funding to support new housing supply
• Continued support for first-home buyers
• Ongoing restrictions around foreign purchases of established dwellings
• Faster planning and environmental assessment initiatives
Combined, these measures appear designed to increase housing construction and direct capital toward new developments.
Whether these proposals remain exactly the same or change through Parliament, the overall direction is becoming increasingly clear.
Why Many Investors Are Looking At House & Land Packages
Across parts of South East Queensland and Melbourne growth corridors, house & land packages continue to attract strong attention from investors and first-home buyers.
Some of the reasons include:
• Access to newer homes with lower maintenance requirements
• Stronger depreciation benefits compared to older properties
• Potential eligibility for government incentives and grants
• Exposure to high-growth infrastructure corridors
• Potentially more favourable treatment under proposed future tax settings
In many cases, finance is structured in stages:
- Land settlement
- Construction loan drawn progressively throughout the build
For some buyers, this can create flexibility during the construction process.
However, selecting the right project remains critical.
Important Risks Investors Should Understand
New builds and house & land packages are not risk free.
Like any property investment, proper due diligence matters.
Some of the most common risks include:
• Site costs exceeding expectations
• Delays in construction timelines
• Builder quality concerns
• Valuation shortfalls at settlement
• Overspending on unnecessary upgrades
• Changes in market conditions during the build period
This is why project selection, builder track record, infrastructure fundamentals, and research are far more important than simply chasing incentives.
At Azzato Buyers Agent, we strongly believe property decisions should always be based on long-term fundamentals first — not solely tax benefits.
Our View Moving Forward
If the proposed Budget measures proceed in a similar form, the Australian property market may gradually move toward a two-speed environment:
• Existing investors holding established property under grandfathered rules
• New investors increasingly being encouraged toward newly constructed housing
For many buyers, this may create new opportunities in:
• House & land packages
• Brand-new dwellings
• Growth corridor developments
• Infrastructure-backed locations
At the same time, buyers should remain cautious, selective, and strategy-focused.
The right property still matters more than headlines.
How Azzato Buyers Agent Supports Clients
At Azzato Buyers Agent, we work closely with clients Australia-wide to help identify quality opportunities based on:
• Research and due diligence • Infrastructure and growth fundamentals • Negotiation strategy • Builder and developer track record • Long-term investment suitability
We also have access to selected off-market and developer-direct opportunities that are not always publicly advertised.
Our role is not to pressure clients into purchases.
Our role is to help buyers make informed, strategic decisions with clarity and confidence.
Final Thoughts
The 2026 Budget proposals may become one of the more significant shifts in Australian property policy over the coming years.
While nothing is certain until legislation passes, many experienced investors are already paying close attention to the direction these policies appear to be heading.
As always, every client’s circumstances are different.
Before making any investment or tax decisions, we strongly recommend seeking advice from a licensed financial adviser, accountant, and qualified tax professional.
If you would like to discuss current market opportunities, house & land projects, or investment strategy, please feel free to contact us.
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Disclaimer
This newsletter contains general information only and does not constitute financial advice, tax advice, or legal advice. The Budget measures discussed are proposed announcements only and may change before becoming law.
Readers should obtain independent professional advice from appropriately licensed advisers before making financial or investment decisions. Information is believed to be accurate at the time of writing but cannot be guaranteed.