What the 2026 Federal Budget Actually Means for Australian Property

I spent the last few days going through the 2026 Federal Budget to better understand what the announced measures may mean for Australian property, housing supply and residential development.

Here is what stood out.

The Tax Changes

The Federal Budget outlined proposed changes to negative gearing, capital gains tax treatment and investment structures, subject to legislation and implementation.

Under the measures announced:

• Negative gearing for residential investment properties would be limited to qualifying new residential properties from 1 July 2027. This applies to investment properties only. Primary residences remain unaffected. Commercial property and shares would remain on existing arrangements.
• Investment properties held before 7:30pm AEST on 12 May 2026, including properties under contract but not yet settled, are proposed to be grandfathered under the existing rules.
• Investment properties purchased between announcement and 30 June 2027 would continue to access negative gearing during that period only. From 1 July 2027, established residential properties would no longer qualify under the proposed framework.
• Losses on established residential investment properties would be quarantined from 1 July 2027. Under the proposed framework, these losses would carry forward and could be offset against future residential property income or capital gains, rather than salary or personal income.
• The existing 50% CGT discount would be replaced with a proposed CPI indexation methodology and 30% minimum capital gains tax rate from 1 July 2027. The stated intention is to tax real gains above inflation. Primary residences would remain exempt under the existing main residence exemption.
• Age Pension and JobSeeker recipients are proposed to be exempt from the 30% minimum CGT rate in years they receive payments.
• SMSFs and widely held trusts are proposed to remain excluded from both the negative gearing and CGT changes.
• Discretionary trusts are proposed to be subject to a 30% minimum tax on distributions from 1 July 2028, with transitional rollover relief available for restructuring.
• The existing ban on foreign investors purchasing established residential properties has been extended to mid-2029.

New Build Exemption - What Qualifies

Under the announced measures, qualifying new builds would continue to retain:

• negative gearing against income
• and access to either the 50% CGT discount or the proposed indexation regime at time of sale.

To qualify, the dwelling must genuinely add to housing supply. This includes:

• dwellings constructed on vacant land
• or developments where existing dwellings are replaced with a greater number of dwellings.

A one-for-one knock-down rebuild would not qualify under the announced framework.

Importantly, these proposed benefits would apply to the first purchaser only.

The existing 60% CGT discount for qualifying affordable housing investments is proposed to remain unchanged.

The Housing and Infrastructure Investment

The Budget also announced significant infrastructure and housing-enabling investment, including:

• A proposed $2.0 billion Local Infrastructure Fund aimed at supporting water, power, sewer and roads for up to 65,000 homes over the decade.
• $500 million toward environmental approvals reform, including streamlined state-based assessment pathways and AI-assisted approvals processes.
• $8.6 billion for road and rail priorities across Australia over 11 years.
• $659.6 million for Newcastle to Sydney high-speed rail development works, which may have broader implications for the Hunter Valley and Mid North Coast regions over time.
• $14.3 million for operational requirements associated with Western Sydney International Airport from 2026-27. The airport is expected to become a major infrastructure and employment anchor within the broader Western Parkland City and Aerotropolis corridor, including areas surrounding Austral.
• $841.7 million for community infrastructure across urban and regional Australia.
• The proposed 100,000 Homes for First Home Buyers program, including grants and concessional financing arrangements with states and territories for homes reserved for eligible first home buyers.
• $85.2 million toward accelerating skilled migrant trades worker assessment and licensing.
• Measures aimed at reducing barriers to prefabricated and modular construction and streamlining planning pathways.
• A 5% deposit scheme for eligible owner-occupiers purchasing a principal place of residence, which has been operating since October 2025.

What This May Mean in Practice

For owner occupiers, the broader direction of policy appears increasingly focused on:

• enabling new housing supply
• accelerating infrastructure delivery
• improving planning efficiency
• and supporting new-build communities.

For developers and investors, the announced measures may place increasing importance on:

• infrastructure-aligned locations
• transport connectivity
• employment corridors
• and areas experiencing long-term population growth.

Projects located within major infrastructure corridors may continue benefiting from improved accessibility, employment generation and broader investment into surrounding communities over extended periods of time.

One Practical Note

Under the proposed framework, capital gains accrued before and after 1 July 2027 may be treated differently for taxation purposes.

Property owners may need to establish asset values as at 1 July 2027 through either formal valuations or ATO-approved apportionment methodologies if the legislation proceeds in its current form.

Professional taxation and accounting advice should be obtained regarding any implications specific to individual circumstances.

The Direction

The broader direction of policy appears increasingly focused on supporting new housing supply and infrastructure-enabled growth.

That does not guarantee outcomes for any individual project or location. However, it reinforces the importance of understanding where infrastructure investment, population growth and long-term housing demand are moving over time.

Read more on our thinking behind AKIRA Austral and The Crescent Estate, or explore further LAANDED Insights.

This article is general commentary only and does not constitute financial, taxation or legal advice. Readers should seek independent professional advice regarding their individual circumstances. Legislative changes referenced remain subject to parliamentary approval and implementation.