Property, shares, crypto, the old holiday house and the family trust. What changes, what doesn’t, and what it costs, before and after.

This week I wrote a short piece for The Bugle on what the Budget means if you own an investment property. This is the long version. It covers the rest of the balance sheet and puts real numbers on the before and after.

The headline most people have absorbed is that negative gearing is gone and the capital gains discount has been scrapped. Neither is quite right. Negative gearing survives for most people who already own property, and the discount survives for every dollar of growth up to 30 June 2027. What replaces it after that works in a completely different way, and whether it costs you money depends far more on what you own, how fast it grows and who owns it than on anything in the headlines.

The short version •    The capital gains changes are law. The Treasury Laws Amendment (Tax Reform No. 1) Act received Royal Assent on 26 June 2026 and applies to gains accruing from 1 July 2027. •    The real change is the swap from a 50% discount to inflation indexation. With inflation at 2.5%, the new rules cost more on anything growing faster than roughly 4.5% a year, and less on anything growing slower. •    The 30% minimum tax is smaller than it sounds for a single large sale (at most about $9,750 per person per year) and much bigger than it sounds for anyone planning to sell down gradually on a low income. •    Negative gearing only changes for established residential property bought after 7:30pm on 12 May 2026. •    Growth on assets bought before 20 September 1985 becomes taxable for the first time from 1 July 2027. •    The change most likely to force families to restructure, a 30% minimum tax on discretionary trusts, is still a draft. •    Super and investment bonds were left alone, which makes them relatively more valuable.

What is law, and what isn’t yet

Commentary since May has blurred the line between what has been legislated and what is still being consulted on. As at the date of writing, this is where things stand.

Measure	Status at 11 September 2026	Applies from
CGT discount replaced by cost base indexation (individuals, trusts, partnerships)	Law. Royal Assent 26 June 2026	Gains accruing from 1 July 2027
30% minimum tax on capital gains	Law	Gains accruing from 1 July 2027
Assets bought before 20 September 1985 brought into CGT	Law	Growth from 1 July 2027
Rental losses quarantined on established residential property bought after 7:30pm AEST, 12 May 2026	Law	Losses from 1 July 2027
Tranche 2 amendments: apportionment formula, deceased estates, relationship breakdown, homes later rented, managed funds	Exposure drafts; consultation closed 21 August 2026	Mostly 1 July 2027
30% minimum tax on discretionary trusts	Draft. Exposure draft 3 September 2026; submissions close 18 September 2026	Proposed 1 July 2028
Division 296 tax on super balances above $3 million	Law. Passed 10 March 2026	1 July 2026

Just as important is what hasn’t changed. The main residence exemption is untouched. Super funds, including SMSFs, keep their one-third discount. Companies never had a discount and still don’t. The small business CGT concessions remain. Qualifying new residential builds can still choose the 50% discount when they are sold, and affordable housing keeps its discount of up to 60%. Anyone receiving the Age Pension or another eligible income support payment at any time in the year of sale is exempt from the 30% minimum tax, though not from the switch to indexation.

How the new calculation works

At the end of 30 June 2027, every CGT asset you hold is treated as though you sold it and bought it straight back at market value. No tax is payable at that point. The gain up to that date is parked (the legislation calls it a deferred gain) and keeps the 50% discount, taxed at your marginal rate, whenever you eventually sell. Growth from 1 July 2027 is measured against a cost base indexed to the Consumer Price Index, and taxed at your marginal rate or 30%, whichever is higher.

Three consequences follow, and the first is the one I would most like people to hear.

You do not need to sell before 30 June 2027 to lock in the discount. The deemed sale does that for you. Selling a good asset early, and paying brokerage, or stamp duty and agent’s fees to get back into property, to solve a problem the legislation has already solved is an expensive way to feel busy.

The 30 June 2027 value matters a great deal. For listed shares and ETFs it is simply the market price. For property and other assets without a ready market price, you can use a market valuation or a Government apportionment formula, which estimates the value by assuming the asset grew at a steady compound rate across your whole ownership. Under the draft rules, the formula is limited to real property and assets without a readily ascertainable market value. A formula like that flatters an asset whose growth came late and short-changes one whose growth came early. You can choose which figure to use when you sell, but you can only commission a proper valuation dated around 30 June 2027 at the time. That is cheap optionality, and I would buy it for every property.

Indexation has limits. It cannot create or increase a capital loss, it isn’t available to foreign or temporary residents, and the asset still needs to be held for at least 12 months.

The real trade: a discount versus indexation

The 50% discount didn’t care how your gain was made. Half of it was taxed whether the asset doubled in three years or crawled along with inflation for thirty. Indexation only removes inflation. So the question that decides whether you are better or worse off is simple: how much of your gain was inflation?

For a slow-growing asset, most of it. For a fast-growing one, very little. Exhibit 2 shows the effect for someone on the top marginal rate, holding an asset for ten or twenty years, with inflation at 2.5% a year, the same assumption Treasury used in its own worked example.

Over ten years, the break-even is about 4.5% annual growth. Below that, the new rules are cheaper than the old. Above it they are dearer, and the gap widens the faster the asset grows and the longer you hold it. At 6% growth, tax takes about 30% of the nominal gain rather than 23.5%. At 10%, it is close to 39%. An asset that merely kept pace with inflation now pays no capital gains tax at all, which is genuinely fairer than the old system and has had almost no airtime.

This is the lens for everything that follows. Fast growth held in your own name is the loser. Slow growth is the winner.

The 30% floor, sized properly

The minimum tax works as a top-up. The post-2027 part of your gain is treated as the top slice of your income for the year. The ATO compares the ordinary tax on that slice with 30% of it, and charges the difference if there is one.

Because the marginal rate is already 30% between $45,001 and $135,000, and higher above that, the floor only bites on the part of a gain that would otherwise have fallen into the tax-free threshold or the 14% bracket. On 2027–28 rates, the most it can add is about $9,750 per person per year, before the Medicare levy and offsets. For someone with no other income, it stops mattering entirely once the post-2027 gain in a year passes about $229,000.

Two more details matter. Deferred gains from before 1 July 2027 aren’t subject to the floor at all. And in the year you sell, they sit underneath the post-2027 gain in the calculation, filling up the lower brackets first.

Which brings me to the correction. In The Bugle I wrote that selling an investment property in the first low-income year of retirement was now largely dead as a strategy. For a property you already own, that was too strong. Exhibit 3 shows why: the saving from waiting until retirement is about $34,000 under both the old and the new rules, because the deferred gain soaks up the low brackets before the floor gets a look in. Where the floor genuinely does damage is the retiree who planned to sell down a portfolio a little each year, keeping each year’s gain inside the lowest brackets. That strategy really is broken, and Exhibit 5 shows by how much.

Asset by asset

Investment property you already own

If you owned it, or had signed a contract for it, at 7:30pm on 12 May 2026, negative gearing is untouched for as long as you hold it. The capital gains change applies regardless.

Exhibit 3 takes a property bought in July 2014 for $700,000, worth $1.25 million at 30 June 2027 and sold in July 2035 for $1.9 million. Under the old rules, half the $1.2 million gain is taxed. Under the new rules, half of the $550,000 accrued to June 2027 is taxed, plus all of the $376,996 by which the sale price exceeds the indexed cost base of $1,523,004. The tax bill rises by about $24,400, whether the owner sells while working or after retiring.

That is real money, but it isn’t the disaster some coverage implies, mostly because the growth after 2027 in this example, about 5.4% a year, sits only a little above the break-even. The lever you actually control is the 30 June 2027 value. In this example, every extra $50,000 of defensible value at that date reduces the eventual tax by about $16,900, because it moves growth out of the fully taxed bucket and into the discounted one. A valuation fee has rarely had a better return.

Investment property you buy from here

For established residential property bought after Budget night, rental losses up to 30 June 2027 are deductible as normal. From 1 July 2027 they can only be used against residential rental income or residential capital gains, with the unused balance carried forward. There is no deferred gain to protect either, so the whole gain is calculated under the new rules.

Exhibit 4 shows what that does to holding costs. A $900,000 established property with a $720,000 loan at 6.5%, $700 a week in rent and $8,600 of running costs loses $19,000 a year before tax. A top-rate owner of a grandfathered property, or of a new build, gets $8,930 of that back through their tax return. The owner of the same property bought after Budget night gets nothing back until they sell.

Super funds and widely held trusts are outside the negative gearing changes entirely, as are qualifying new builds, build-to-rent developments and investors in certain government housing programs. New builds also keep the choice of the 50% discount on sale, and under the draft rules a home bought within 24 months of its first occupancy certificate can qualify. The draft Tranche 2 amendments would also preserve grandfathering where a home you owned before Budget night is later rented out, and where a property passes to a spouse or co-owner on death or relationship breakdown.

My view: the tax system is now openly paying investors to buy new. That is a reason to look at new stock, not a reason to buy it. A tax concession doesn’t fix a developer’s margin built into the price, or an oversupplied block.

Shares, ETFs and managed funds

The negative gearing changes don’t touch shares, so interest on money borrowed to invest in a portfolio stays deductible as before. The capital gains changes apply in full.

For shares you already hold, the split is automatic: the market price at 30 June 2027 sets the deferred gain. There is nothing to value and nothing to elect. What changes is new money. Exhibit 5 follows $300,000 invested in an ETF from July 2027, growing 6% a year before dividends and sold after ten years.

For the high and middle earner, tax on the gain rises by about $16,300, or roughly 29%. For the self-funded retiree who sells a fifth of the portfolio each year, the change is of a different order: about $8,700 of tax across the five years under the old rules (close to nil once offsets are counted) against about $60,600 under the new. This is the floor at work, and it is the biggest planning casualty of the package for retirees with wealth outside super.

Two further points for portfolio investors. Dividends and franking credits are untouched, so the after-tax gap between income and growth narrows, and a fully franked Australian dividend stream looks relatively better than it did. And turnover now costs more. Every gain a fund manager realises inside a unit trust is distributed to you and taxed under the new rules, so a high-turnover active fund held in your own name is more expensive than it was. The same fund held in super, or a low-turnover index fund, is far less affected.

Crypto and other high-growth assets

This is where the change bites hardest. Exhibit 6 takes $50,000 of crypto bought after 1 July 2027 that grows to $250,000 in five years. Inflation accounts for less than $7,000 of the $200,000 gain, so almost all of it is taxed. For a top-rate investor, tax on the gain nearly doubles, from $47,000 to $90,912. Someone earning $90,000 goes from $35,850 to $79,762.

The same logic applies to anything bought for fast growth: small caps, venture investments, early-stage unlisted companies. The Government has consulted on a separate concession that would give investors in eligible innovative start-ups the choice of the old discount. For volatile assets held before 1 July 2027, remember that the value on a single day sets the split. That day could be a good one or a bad one, and you don’t get to choose it.

Commercial property and slower-growing assets

The other half of Exhibit 6 is the part of the story nobody is telling. A $1 million commercial property growing 3% a year for 15 years produces a $557,967 gain, but $448,298 of it is inflation. Tax for a top-rate owner falls from $131,122 to $51,545. Commercial property is also untouched by the negative gearing changes.

The same is true of anything whose price has broadly tracked inflation: plenty of regional commercial property, many private businesses, unlisted assets bought at full prices. If that describes a large part of your balance sheet, the new rules may leave you better off, and there is no reason to rush anything.

The pre-1985 holiday house

Assets bought before 20 September 1985 have never been subject to capital gains tax. From 1 July 2027, their future growth is. Everything accrued before that date stays tax-free, but the exemption no longer runs forward.

Exhibit 7 takes a holiday house bought by a couple in 1983, worth $1.6 million at 30 June 2027 and sold in 2037 for $2.6 million. Before the change, the sale was tax-free. After it, the couple’s real gain of $551,865 produces a combined tax bill of $190,580 if they are retired with no other taxable income, and $259,376 if both are still working on the top rate.

This is the most dramatic before-and-after in the entire package, and it falls on exactly the kind of long-held family asset that is common on this stretch of coast. The planning point is simple and non-negotiable: get a proper valuation as at 30 June 2027. Every dollar of value you can defend on that date is a dollar that is never taxed. The same rules catch pre-CGT shares in private companies and interests in trusts, and pre-CGT assets held by companies. If a post-1985 extension or major improvement was already treated as a separate CGT asset, that part was never exempt in the first place. Rules for assets passing on death are due for further legislation, so any estate plan built around a pre-CGT asset should be reviewed once that lands.

Cash, term deposits, bonds and private credit

Interest has never been a capital gain and is still taxed at your marginal rate, so nothing changes here directly. Indirectly, the after-tax advantage growth assets have enjoyed over income assets since 1999 has narrowed for high earners. That is worth keeping in mind when deciding how much growth risk a portfolio actually needs to take.

Structures: who pays what now

The same asset now carries very different tax depending on who owns it. Exhibit 8 compares the tax on a capital gain for an asset bought after 1 July 2027 that grows 6% a year for ten years.

Owner	Before	After	Change
Individual, top marginal rate	23.5%	30.4%	Worse
Individual, 30% bracket	16.0%	20.7%	Worse
Individual, low income (14% bracket)	7.0%	19.4%	Much worse (30% floor)
Individual receiving the Age Pension (14% bracket)	7.0%	9.0%	Slightly worse (no floor)
Super fund, accumulation phase	10.0%	10.0%	Unchanged*
Super fund, retirement phase	0%	0%	Unchanged
Company	30.0%	30.0%	Unchanged
Investment bond (tax paid inside the bond)	30.0%	30.0%	Unchanged
Discretionary trust	Beneficiaries’ rates, as above	As above, plus proposed 30% trustee-level tax from 1 July 2028	Draft

Tax as a share of the nominal gain on an asset bought after 1 July 2027, growing 6% a year for ten years, CPI 2.5%. Individual rates include the Medicare levy except the low-income and Age Pension rows. *Division 296 adds tax for members with balances above $3 million. Company figure excludes further tax when profits are paid out. Cloudbreak Wealth calculations; illustrative only.

Super was left alone. Long-held gains in accumulation phase are still taxed at an effective 10%, and nil in retirement phase. For members with more than $3 million, Division 296 now applies to realised earnings, at an effective rate of up to 30% on the share of earnings above $3 million and up to 40% above $10 million, and SMSFs have a one-off election to reset cost bases to 30 June 2026 values for that tax. Even so, for most families super is now a clearly better home for long-term growth assets than it was in May.

Investment bonds pay 30% tax internally, with no personal tax on withdrawals after ten years and no capital gains event when you switch investments inside the bond. None of that changed. For a top-rate investor with a ten-year horizon, a bond’s 30% on gains is now similar to personal ownership at moderate growth rates and better at high ones, and it taxes income at 30% rather than 47%. They deserve a fresh look.

Companies were already taxed at 30% on the full gain, and still are. The gap with personal ownership has narrowed, but money has to come out of a company eventually, and that is taxed too.

Discretionary trusts are where the biggest structural decisions sit, and the key measure isn’t law yet. The capital gains changes already flow through trusts to beneficiaries. On top of that, Treasury’s exposure draft released on 3 September would impose a 30% minimum tax at trustee level from 1 July 2028. Individual beneficiaries would receive a non-refundable credit for it. Corporate beneficiaries would not, which makes the bucket company model close to unworkable. The draft offers two ways out: a three-year rollover to move assets into another structure, with the window opening on 1 July 2027, or an election to stay outside the regime by permanently fixing named beneficiaries and their percentages. You can’t do both. Testamentary trusts, fixed trusts, widely held trusts and deceased estates are among those exempt.

My advice on trusts is to model now and act later. Don’t restructure on a draft. But neither way out is easy to undo, the windows are short, and stamp duty on moving property out of a trust can dwarf the tax saving. That analysis should be finished well before 2028.

What I would actually do before 30 June 2027

• Don’t sell to lock in the discount. It is already locked in. Sell only what you would have sold anyway.
• Value every property and unlisted asset as at 30 June 2027, pre-CGT assets first. Book a valuer early; plenty of other people will want the same date.
• Rebuild your cost base records now: purchase costs, capital improvements and depreciation claimed. Under indexation, the date each cost was incurred matters.
• Rethink any plan to draw down a share portfolio held outside super in small parcels. Retirees receiving even a part Age Pension at any time in the year are exempt from the floor, which is worth modelling carefully, because sale proceeds count toward the assets test.
• Think harder about who owns new money. Super contributions within the caps and investment bonds are relatively better homes for long-term growth than they were in May.
• If negative gearing is central to a new property purchase, it is a new build or it is probably the wrong purchase. Even then, buy the property, not the tax treatment.
• If you have a family trust, model the 2028 minimum tax now, and speak with your accountant before the rollover window opens on 1 July 2027.
• SMSF members near or above $3 million should look at Division 296 alongside all of this, because “where should this asset sit?” is now a three-way question.

The bottom line

I think this package is more defensible than its critics allow in one respect and harsher than its defenders admit in two. Taxing only real gains is fairer, and owners of slow-growing assets will pay less. But fast-growing assets held in your own name will pay noticeably more, and anyone relying on low-income years or trust distributions to manage their tax has lost most of that room.

The winners are the structures that weren’t touched: super, investment bonds and, to a degree, the family home. The losers are high-growth personal holdings and income splitting. None of it is a reason to panic-sell anything. The months between now and 30 June 2027 are for valuations, records and deciding who should own what. It is dull, necessary work, and it will be worth more than any trade you could make.

 

 

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Important information

This article contains general information only and does not take into account your objectives, financial situation or needs. It is not tax advice. Before acting, consider whether it is appropriate for you and seek personal financial advice and advice from a registered tax agent. It reflects our understanding of legislation and exposure draft legislation as at 11 September 2026, which may change. Examples are illustrative only and are not forecasts. Anthony Hourigan (AR 432943) is an Authorised Representative, and Cloudbreak Wealth Pty Ltd (ABN 23 603 641 407) is a Corporate Authorised Representative (No. 1270809), of PGW Financial Services Pty Ltd, AFSL 384713. Cloudbreak Wealth, 3/125 Terralong Street, Kiama NSW.