The 2026-27 Federal Budget carries the most significant property tax changes Australia has seen in more than twenty-five years. They were announced on budget night and are still working through to legislation, so the detail can move. The direction is already clear, though. What it means for you depends on what you already own, and on what you plan to buy next.
What follows is the information laid out plainly, with real numbers attached. None of it is a recommendation. The decision in your own situation is yours.
None of this happened by accident. Government after government has leaned on property investors, and this Budget leans harder — squeezing established holdings while steering the money where it wants it to go.
Two changes are the ones to watch, both taking effect from 1 July 2027.
Negative gearing comes first. From that date, losses on established residential property bought after 7:30 pm AEST on 12 May 2026 can no longer be offset against your salary or other income. They can only be applied against rental income or capital gains from residential property, with any excess carried forward. New-builds are left out of the restriction entirely, and their losses stay fully deductible against all income.
Capital gains tax is the second. The 50 per cent CGT discount is being replaced by a minimum 30 per cent tax on inflation-adjusted gains. Investors in new builds get a choice between the old discount and the new arrangement, whichever best serves them.
A third change sits a year further out. From 1 July 2028, a minimum 30 per cent tax applies to discretionary trusts, with some exceptions and three years of rollover relief for restructures.
If you already own a property, you are grandfathered. Anything held before 7:30 pm AEST on 12 May 2026 keeps the current rules — full negative gearing and the 50 per cent discount — for as long as you hold it. The changes are not retrospective.
The other protected category is new builds. The whole thrust of the Budget is to make established property less rewarding to hold and push the money toward new supply — a deliberate choice, aimed squarely at investors. Established property bought from budget night onward is treated less favourably, and new construction is treated more favourably. That single distinction runs through every measure.
Specialist Disability Accommodation is built new to strict NDIS design standards. It qualifies as a new build, so the treatment the budget preserves for new construction applies to it.
For seven years I stayed away from recommending SDA. The sector was full of operators cutting corners. What changed my view was finding homes built to a standard I had not seen matched anywhere — thirty to forty per cent larger than the regulations require, every bedroom with its own bathroom, a self-contained room for the overnight carer, fire sprinklers fitted as standard when the rules do not ask for them. I started calling that standard Bentley-Grade. The term is mine. It marks the gap between what these homes are and what the sector minimum demands.
The income is the part most investors have not met before. SDA funding attaches to the participant as an individual. It is paid by the Federal Government, indexed toCPI each year, and it flows regardless of the tenant's personal financial situation. It reaches you, the owner, through a registered SDA provider. It is a government-funded income stream rather than rent in the ordinary sense.
There is real stability in the arrangement, too. The head lease typically runs for ten years, with a further ten-year option, and turnover tends to be low — once a participant is settled in a home built around their needs, they have little reason to move. The registered provider handles the day-to-day: the tenancy, the participants, compliance and upkeep. Your part is largely to own the asset and receive the income.
I would rather show you a finished project than a projection.
There is a three-bedroom High Physical Support home in Shepparton, with a self-contained room for an overnight carer. Completed, certified, occupied. Its total delivered cost, signed off by the project's professional indemnity insurer, was $1,306,041 — land through to SDA accreditation.
Gross income across the three rooms and the overnight carer's room runs at $193,884 a year. Running costs at the home came in at $37,140 a year, just under 19 per cent of income, covering provider fees, fire services, water, insurance, rates and maintenance. That leaves net income of about $156,700 a year before allowance for longer-term maintenance.
In yield terms that is a gross figure near 14.8 per cent and a net figure around 12 per cent on the delivered cost. Some like to model these homes on a slightly higher cost base than the home ran at, to build a future maintenance reserve, which trims the net a little. Either way the numbers sit in a different range to standard residential.
The per-room income behind those figures lines up with the published NDIS price for thecategory and the region, so it is not a number I am asking you to take on trust.
One more figure is worth sitting with. A sworn valuation of that same home assessed its market value at $1,630,000 — on a project that cost $1.3 million to deliver. The valuation is income-based. Once one of these homes is stabilised and earning, it is deemed a commercial property and valued on what it produces, not on what the house next door sold for. That insulates it, in large part, from a softening residential market.
A second home, now under construction on the same basis, is modelled at a development cost of $1,309,075 against gross income of $196,611 a year. The consistency between the finished home and the one being built is the point I would draw your eye to.
A lot of the people I talk to share one problem. They are five to fifteen years from retirement, holding a portfolio that has grown in value but produces thin income. They can also see that selling down established property after July 2027 carries a heavier CGT bill than it would have before. The maths that worked for twenty years does not carry forward as cleanly.
The budget does not solve that. What it does is change which strategies are tax-efficient now, and which are not. Moving capital from a low-yielding established property into a new build — including Bentley-Grade SDA — now sits on the favoured side of the tax line rather than the penalised side. It can also add significantly to both your cash flow and your equity.
Whether that fits your situation depends on your portfolio, your capital position, your timeframe and your goals. I cannot answer that from a web page, nor would I try.
No investment is without risk, and SDA has its own. Bentley-Grade SDA homes are managed end to end — site selection, design, construction, certification and tenanting, through to a stabilised, earning home — and that discipline is built to mitigate risk as far as possible. The homes built to date are operating and serving a real community need.
That said, vacancy risk sits in the window between completion and full occupancy. Mainstream lenders stepped back from SDA construction funding in early 2025, so most projects now run on deployable capital — equity, refinancing, the sale of an asset, cash — rather than a standard construction loan. NDIS policy can change, though changes to a program that houses severely disabled Australians tend to be signalled well ahead and applied to new projects rather than existing homes. Fraud, waste and mismanagement in the scheme are what the government is targeting.
These are real considerations. They are the sort of thing worth working through properly rather than skating over.
If it would help, I am happy to sit down and model this against your own numbers — what you hold, what it earns, and what the changes do to it. No decision is required. It is about seeing the picture clearly before anything moves.
General information only — not personal financial, tax or legal advice. The budget measures here were announced in the 2026-27 Budget and remain subject to legislation; your accountant can confirm what applies to you.
