Last night the Federal Government delivered a landmark Budget for housing, introducing major changes to how property investment is taxed. While the reforms are national, their impact will be felt differently across markets including here in South Australia. The changes outlined below are proposed by the Government, and subject to being passed by both houses of parliament.

Key proposals

  • For purchases made after 7:00pm ACST on 12 May 2026 (Budget Time), you will only be able to negatively gear new residential properties after 1 July 2027
  • From 1 July 2027, the 50% capital gains tax (CGT) discount will be removed, and replaced with indexation and a 30% minimum tax
  • The policy aims to shift investment into new housing and improve affordability

Negative gearing

For existing residential investment properties owned at Budget Time, nothing changes. You can continue to negatively gear the property (i.e. claim losses against other income) until you sell your residential investment property.

For residential properties purchased after Budget Time:

  • if it is an established property, you will only be able to negatively gear the property until 30 June 2027. From 1 July 2027, losses can only be applied to future rental income or capital gains from property
  • if it is a new property, your negative gearing will not be impacted i.e. you will continue to be able to claim losses against other income while you hold that property, even after 1 July 2027.

Capital gains tax

Also from 1 July 2027, the long-standing 50% CGT discount will be removed. It will be replaced with:

  • Inflation-based (cost base) indexation
  • A minimum 30% tax on capital gains

These changes will apply broadly, across property, trusts and other assets – but only to gains made from 1 July 2027 onwards. Accordingly, you would apply the 50% CGT discount to 30 June 2027, and then the cost base indexation from 1 July 2027.

Importantly:

  • The family home remains CGT exempt
  • New build investors will retain flexibility, with the ability to choose between the current CGT discount or the new regime
  • Pensioners and income support recipients will be exempt from the minimum 30% tax

Why this matters for the property market

The Government’s goal is to rebalance the housing system, reducing the tax advantages attached to established property, and directing capital into new housing supply.

In simple terms, the changes reduce the incentive for investors to purchase established properties, while encouraging greater investment into new housing. The Government’s intention is that this shift will improve access for first-home buyers, place downward pressure on price growth over time, and ultimately support an increase in new housing supply.

However, there is a clear trade-off. Reducing tax incentives for investors may also reduce overall investment, particularly in established housing, which is why there is ongoing debate about the impacts this will have in the level of supply of rental properties, and ultimately, the cost of renting.

What it means for South Australia

South Australia remains a supply-constrained market, and that’s where these changes become particularly relevant.
With vacancy tight and demand strong:

  • Reduced investor activity in established homes could tighten rental supply further
  • New builds will become even more central to market activity
  • Buyer competition may gradually shift away from investors toward owner-occupiers

What buyers, investors and families should consider

For buyers, particularly first-home buyers, this may create more opportunity over time, but not immediately. The market won’t reset overnight, and the changes don’t fully kick-in until 2027.
For investors, the strategy is shifting:

  • Established property becomes less tax-effective
  • New builds become the preferred investment pathway
  • Timing (buying and selling) becomes more important than ever

In addition to the negative gearing and capital gains tax changes discussed above, there are a range of other proposed measures that will affect investors, including a minimum 30% tax on the taxable income of discretionary trusts, to apply from 1 July 2028.

Without addressing all proposed measures in detail, it is evident that this Budget has far reaching impacts, including:

  • Estate planning
  • Property transfers
  • Ownership structures

This is where tailored legal and tax advice becomes critical.

These reforms are likely to change how people approach property decisions over the coming years.

While tax will not be the only consideration when dealing with property, below are some of the key considerations for buyers, sellers, investors and families as a result of the proposed tax changes moving forward.

Buyers
  • More focus on new builds and house-and-land options
  • First-home buyers may feel more confident entering the market
  • Greater need for guidance around timing and strategy
Investors
  • Reassessment of current property strategies
  • Incentive to hold onto existing residential investment properties that are negatively geared
  • Shift purchasing toward new developments or alternative investments
  • Increased demand for tax and structuring advice
Vendors
  • Potential changes in buyer mix (fewer investors over time)
Families & high-net-worth clients
  • More complex decisions around trusts, transfers and succession planning
  • Stronger need for coordinated advice across legal, tax and finance

 

How can Eckermanns help?

As these changes begin to take shape, many people will be looking for clarity, confidence and a clear sense of what to do next. At Eckermanns, we work closely with clients and their tax advisors to help clients understand how the changes apply to their situation, guiding them through property ownership, legal structures and estate planning decisions with confidence.

By getting the right advice early, our clients are better positioned to make informed decisions and take advantage of the opportunities these reforms may present.

Please get in contact with us if we can be of assistance to you.

 

Image Credit: NewsWire / Martin Ollman.