When it comes to property investing in Australia, tax settings have always played a supporting role in shaping behaviour. With the Federal Government’s recent reforms to negative gearing and capital gains tax (CGT) now passed into law, it’s understandable that many investors are asking — what does this actually mean for me? And perhaps more importantly — should this change the way I invest?
A Shift in Incentives — Not a Rewrite of the System
At its core, the reform is not about removing property as an investment option. Instead, it is about changing where incentives are directed. The reforms are designed to encourage investment into new housing supply while reducing tax incentives for established residential property purchases.
From 1 July 2027:
- Negative gearing will favour new residential properties, rather than established ones.
- The 50% CGT discount will be replaced with a different framework based on indexation and a minimum tax rate.
- Existing investments are largely protected under grandfathering rules.
So rather than a wholesale disruption, this is a rebalancing exercise.
Understanding What Has Actually Changed
Historically, negative gearing allowed investors to offset property losses against other income — often improving after-tax cash flow in the earlier years.
Going forward:
- Investors purchasing established properties after 12th May 2026 will no longer be able to offset losses against salary or wages.
- Those losses are not lost — they are simply deferred and carried forward.
- New builds continue to receive full negative gearing benefits.
On the CGT side:
- The 50% discount will be replaced from July 2027.
- Capital gains will reflect inflation-adjusted growth, alongside a minimum tax rate.
- Importantly, gains accrued prior to this date remain under the current rules.
This creates a system where timing — both of acquisition and disposal — becomes more relevant.
Stepping Back — What Actually Drives Outcomes
It is easy to get drawn into the tax changes themselves and the emotional turmoil from all the media focus. But if we step back, successful investment outcomes have never been purely driven by tax settings.
They are driven by designing a thoughtfully designed portfolio that focuses on:
- Broad Diversification.
- Time in the market.
- And disciplined decision-making.
Tax can enhance outcomes — but it rarely creates them.
AP Investment Philosophy: Holding you on good stead
At Alman Partners, our approach has always been grounded in building diversified, liquid portfolios structured around academic rigour. We focus on capturing known return premiums — such as size, value and profitability — rather than concentrating risk in a single asset or asset class.
Our portfolios have been constructed using well-diversified managed funds, allowing for:
- Liquidity;
- Transparency;
- And the ability to adapt as circumstances evolve.
Importantly, we collaborate with accountants and other experts to identify structures driven by strategic needs first, while thoughtfully considering:
- Tax outcomes;
- Complexity;
- And long-term flexibility.
What This Means in Practice
For many investors, the immediate impact will be limited:
- Existing property holdings remain largely unaffected.
- Previously accrued capital gains continue to benefit from current rules.
- Investment property owners may be advised by their accountants to seek valuation as on 30th June 2027.
However, for future decisions, there is a subtle but important shift.
This may be a good opportunity to revisit:
- Whether property is being used as a strategic allocation or a tax-driven decision.
- The role of diversification within the portfolio.
- The balance between growth, income and liquidity.
For some, there may be reasons to act ahead of the changes.
For others, it may simply reinforce the importance of a well-diversified approach.
Our View
At Alman Partners, we see changes like this as an opportunity to pause and reassess — not react. While tax settings may evolve, the underlying principles of successful investing remain consistent.
Periods of change tend to reward those who:
- Stay disciplined;
- Focus on long-term objectives;
- And ensure their strategy remains aligned with their broader goals.
Because ultimately, it is the strength of the strategy — not the tax environment — that drives outcomes over time.
If you have any concerns on how the changes may impact your position, please contact your adviser.
Niyati Khanna (CFP® Professional, CA, MBA [Finance & Strategy]) is a representative of Alman Partners Pty Ltd, Australian Financial Services Licence No: 222107.
Any information provided to you was purely factual in nature. It has not been taken into account your personal objectives, situation or needs. The information is objectively ascertainable and is not intended to imply any recommendation or opinion about a financial product. This does not constitute financial product advice under the Corporations Act 2001 (Cth). It is recommended that you obtain financial product advice before making any decision on a financial product such as a decision to purchase or invest in a financial product. Please contact us if you would like to obtain financial product advice. While we believe the information in this article is accurate at the time of publication, we do not warrant its completeness or reliability. Information is subject to change without notice.