What the 2026–27 Budget Means for You
The Federal Government has handed down a Budget it describes as built around responsibility, productivity and fairness. For property owners, investors and business owners on the Central Coast and across Australia, the practical impact comes down to four key changes, and several areas where smart financial decisions can still be made.
Whether you’re a first home buyer, a residential property investor, a commercial borrower or a small business owner, understanding these changes now gives you time to act before they take effect in 2027–28.
Key Change 1: Negative Gearing, Restricted for Established Homes
What’s changing?
From 2027–28, negative gearing on established residential properties will be wound back for properties purchased from Budget night onwards. Losses from these properties can no longer be used to offset other income; they can only be used to offset other property income or carried forward to future years.
Negative gearing is preserved for:
- New residential builds
- Shares
- Commercial and industrial property
What does this mean for property investors?
Around 1.2 million Australians currently claim a tax loss on investment property. For those holding or planning to buy established residential properties, the after-tax return will fall, and for new purchases, the tax benefit that has made negative gearing so popular simply won’t apply in the same way.
This is likely to reduce investor demand for established homes in the short term, which analysts suggest could lead to a temporary price dip of around 5% as investors reassess their strategies.
What should you do?
If you currently negatively gear an established investment property purchased before Budget night, your existing arrangements are unaffected. The changes only apply to new purchases going forward.
For investors planning their next move, now is the time to speak with a finance broker about structuring your next purchase in the most tax-effective way, whether that’s through a new build, commercial property, or an SMSF.
Key Change 2: Capital Gains Tax, The 50% Discount Is Gone
What’s changing?
The existing 50% CGT discount will be replaced by taxation of real (inflation-adjusted) capital gains from 2027–28, applying to assets purchased from Budget night onwards. A minimum tax rate of 30% will apply.
For assets already held, a proportionate blend of the old and new rules will apply based on how long the asset has been held. New residential builds are given a choice of the old or new model.
What does this mean for investors?
For high-income earners, this change could push Australia’s effective CGT rate from one of the lowest to one of the highest among comparable countries. The impact is most significant for:
- Growth shares and businesses outside any startup carve-outs
- Long-term property investors who have relied on the 50% discount to reduce their tax bill on sale
- High-income earners where the 30% minimum rate represents a meaningful increase
Whether the change hurts or helps will depend on individual circumstances, specifically the rate of asset price growth versus inflation. In a higher-inflation environment with more modest price growth, some investors holding assets for 12 years or less may find the new real-gains model comparable to or better than the old discount model.
What should you do?
Review your existing investment portfolio and, where possible, understand what the tax treatment will be on any assets purchased from now. This is particularly important if you are considering buying shares, investment property or a business interest. Speaking with both your accountant and finance broker together is strongly recommended.
Opportunity 1: Buying Property Through an SMSF
Why SMSFs are now more attractive than ever
Super fund tax rules are completely unchanged by this Budget. SMSFs continue to benefit from:
- A 15% concessional tax rate on income
- 10% CGT on assets held over 12 months
- 0% tax in retirement phase
For investors who have relied on negative gearing to offset personal income, an SMSF borrowing arrangement (known as a Limited Recourse Borrowing Arrangement, or LRBA) may offer a significantly more tax-effective structure for the next investment property purchase.
With the personal tax benefits of negative gearing on established homes being wound back, the gap between investing in your own name and investing through super widens considerably. This is one of the most important conversations Central Coast property investors should be having with their finance broker right now.
Opportunity 2: Commercial Lending, Fully Exempt from the Changes
Commercial property remains business as usual
Commercial and industrial property is explicitly exempt from the negative gearing changes. Shares are also unaffected. This means commercial property investment remains on exactly the same footing as it was before the Budget.
For investors looking to reposition away from established residential property, commercial and industrial property lending is worth serious consideration. Relative to residential investment, commercial property has just become more tax-competitive overnight.
It’s worth noting that entry costs for commercial property are typically higher than residential, and financing structures can be more complex, covering factors such as loan-to-value ratios, lease terms, tenant covenants and asset type. This is where having an experienced finance broker in your corner makes a real difference. AAP Finance Brokers has extensive experience in commercial lending on the Central Coast and can help you navigate the right loan structure for your situation. Equally important as thorough due diligence on the loan structure is asset selection; choosing the wrong property type or the wrong finance product can significantly affect your returns. Getting both right from the outset is critical.
If you’ve been considering commercial property as part of your investment portfolio, now is a strong time to start the conversation with us and your financial advisors.
Opportunity 3: $20,000 Instant Asset Write-Off, Now Permanent
Great news for small business owners
The $20,000 instant asset write-off for small businesses has been made permanent. This means eligible businesses can immediately deduct the full cost of assets up to $20,000 in the year of purchase, improving cash flow and reducing tax liability without waiting for depreciation to play out over several years.
This is particularly relevant for businesses considering:
- Equipment or machinery upgrades
- Vehicle purchases
- Fit-out or refurbishment costs
- Technology investments
If your business has been holding off on an asset purchase, the permanence of this measure removes the uncertainty of year-to-year renewals. Combined with business equipment finance or a chattel mortgage, the $20,000 write-off can make a meaningful difference to your end-of-year position.
Opportunity 4: R&D Tax Credit, Expanded
More support for innovative businesses
The Research & Development tax credit has been expanded, providing greater incentives for businesses investing in innovation, new products or improved processes. If you operate in manufacturing, technology, agriculture, professional services or any sector where product or process development is part of your business, this could meaningfully reduce the effective cost of R&D investment.
For businesses financing R&D activity through a business loan or line of credit, the expanded credit improves the after-tax cost of borrowing. Talk to your accountant about whether your business activities qualify, and speak with AAP Finance Brokers about the right finance structure to support your investment.
What About the Broader Property Market?
Beyond the specific tax changes, the Budget’s broader economic settings are relevant for anyone buying, selling or holding property:
Interest rates: AMP Economics forecasts one further RBA rate hike in August, followed by rate cuts in 2027. For buyers and refinancers, being pre-approved and ready to move when rates turn will be a significant advantage.
Property prices: The withdrawal of investor demand from established homes may create a short-term buying window for owner-occupiers and first home buyers. However, Australia’s structural housing shortage, estimated at between 200,000 and 300,000 dwellings, means any price softness is likely to be temporary.
Housing supply: The Budget’s Housing Accord target of 240,000 new homes per year continues to run approximately 60,000 below target annually. New residential construction remains a high-demand sector, and negative gearing is preserved for new builds, meaning investor interest in new housing will continue.
New builds vs established homes: With negative gearing intact for new residential construction, off-the-plan and new build investment becomes comparatively more attractive. First home buyers and investors alike should be looking at new supply.
Summary: What to Do Now
- More information is provided by the Government:
- https://budget.gov.au/content/04-tax-reform.htm
- https://budget.gov.au/content/02-cost-of-living.htm
| If you are… | Key action |
| A residential property investor | Review new purchase plans, consider new builds, SMSF, or commercial |
| An existing negatively geared investor | No immediate change, review strategy for future purchases |
| Interested in commercial property | Strong opportunity, changes don’t apply |
| A small business owner | Lock in asset purchases under the permanent $20k write-off |
| A first home buyer | Monitor the market. A short-term price dip may create an opportunity |
| Considering an SMSF investment | Speak to your broker and accountant about LRBA options |
Speak to AAP Finance Brokers, Central Coast
The 2026–27 Budget reshapes the investment landscape, but with the right advice and the right finance structure, there are still strong opportunities for property buyers, investors and business owners.
Have questions about how the Budget changes affect your property, investment or lending decisions? Talk to your local finance experts, AAP Finance Brokers, Central Coast.
📞 1300 141 453 🌐 aapfinancebrokers.com.au
We care, to ensure you get the best loan.
