Major Investor Tax Reforms Pass Parliament
Sweeping changes to Australia’s investor tax system, including reforms to capital gains tax (CGT) and negative gearing, have passed both houses of Parliament following the approval of the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026.
The legislation cleared the Senate on 25 June 2026 before returning to the House of Representatives, where final amendments were approved.
Key Changes:-
From 1 July 2027, the following reforms will take effect:
The current 50% capital gains tax discount will be replaced, with a 30% minimum tax rate applying to capital gains accrued from that date.
Negative gearing for residential investment properties will be restricted to newly built homes, ending tax deductions for losses on most purchases of existing properties.
Australian workers will receive a standard $1,000 tax deduction from the 2027–28 financial year, allowing eligible taxpayers to reduce their taxable income without needing to claim individual work-related expenses.
SMSF Property Borrowing Changes
As part of negotiations to secure the Greens’ support, the government also agreed to ban Limited Recourse Borrowing Arrangements (LRBAs) for residential property within self-managed super funds (SMSFs). The change effectively removes the primary mechanism SMSFs have used to leverage into residential real estate.
The Greens also secured an amendment preventing future governments from weakening the reforms through regulation alone, ensuring any significant changes must instead be made through Parliament.
Further Legislation to Follow:-
The government has confirmed that additional legislation will be introduced later this year to address outstanding issues, including:
Carve-outs for small businesses.
Grandfathering protections for jointly owned investment properties in cases of divorce or the death of a co-owner, ensuring affected owners are not unfairly excluded from existing exemptions.
The reforms represent one of the most significant overhauls of Australia’s property investment tax system in decades and are expected to reshape investment strategies across the residential property market.
