The Change

From 1 July 2027, residential investment properties purchased AFTER 12th of May 2026, will no longer be able to offset rental losses against other income.

Rental losses can only be deducted against other residential property income, including capital gains.

The Impact

If your property makes a loss, and you do not have other rental properties/capital gains or the loss exceeds the income from the other properties/capital gains; the loss will be carried forward to offset future income.

Exemptions

Already have residential investment properties being rented?
If you had a residential investment property and were renting this property prior to the 12th of May 2026, you are exempt from these changes. You can continue to negatively gear. Any future properties purchased will not be exempt.

Properties purchased between 12 May 2026 and 30 June 2027, can be negatively geared until 30 June 2027.

*New builds purchased before or after 1 July 2027 can continue being negatively geared.

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*New builds are residential properties that increase house supply. Demolishing and rebuilding one free-standing house does not qualify as a new build.

The Impact

What does this mean? Currently, you pay tax on only 50% of the capital gain you make at your marginal tax rates. From 1 July 2027, you will pay a minimum of 30% tax on the entire capital gain. The cost base will be indexed using the Consumer Price Index (CPI).

The minimum tax rate of 30% will only apply to gains accrued from 1 July 2027.

Transitioning

Assets purchased and sold prior to 1 July 2027 will receive the 50% CGT Discount.

Assets purchased before 1 July 2027 and sold after 1 July 2027 will receive the 50% CGT discount from the purchase date to the value of the asset at 1 July 2027. The new arrangement will apply from 1 July 2027 to the sale date, using the value of the asset at 1 July 2027 as the cost base.

Exemptions

Pre-CGT Assets (Assets owned prior to 1985)

These assets will continue to be exempt UNTIL 1 July 2027. If the asset is sold after this date, CGT will apply on the gains made from 1 July 2027.

New Builds
Investors of new builds can choose which CGT method they want to use. These include dwellings constructed on vacant land. Existing dwelling/s demolished and replaced with a greater number of dwellings.

Our Advice

Be tax ready, even if you have no current plans to sell.

Contact your tax agent to discuss your circumstances.

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The Change

From 1 July 2028, Discretionary Trusts will pay a minimum of 30% tax on profit. The tax will be paid by the trustee and beneficiaries will receive a non-refundable tax credit with their trust distribution. 

The Impact

What does this mean?

Currently, discretionary trust income is distributed to beneficiaries and taxed at their individual marginal tax rates. Under the proposed changes, discretionary trust distributions would generally be subject to a minimum 30% tax rate, regardless of the beneficiary’s personal tax bracket.

This significantly reduces the tax benefit of distributing income to lower-income beneficiaries.

Beneficiaries would instead receive a non-refundable tax credit for their share of the tax already paid in the trust, which can be applied against the income tax payable in their personal tax return.

Exclusions & Rollover Relief 

All other types of trusts are excluded from this change.

• Fixed Trusts
• Widely Held Trusts
• Special Disability Trusts
• Deceased Estates
• Charitable Trusts
• Complying Super funds

Income excluded from this change that existed at the 12th of May 2026.

• Primary Production
• Income from assets of Testamentary Trusts

Restructuring Relief
Businesses wishing to restructure into companies or fixed trusts will have access to income tax relief including Capital Gains Tax available for three years from 1 July 2027.

Our Advice

Make an appointment with your tax agent to discuss your circumstances and determine the best course of action based on your business.

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