The 2026 budget changes affect investment property taxation fundamentally. From July 2027, the capital gains tax regime changes. Understanding these changes and planning accordingly could mean the difference between building wealth efficiently and paying significantly more tax than necessary. This guide covers three critical decision points: when to sell, whether to hold, and how to restructure your investment assets.
The Three Changes That Matter
Current investors benefit from the 50 per cent capital gains tax discount. You include only half of your capital gain in assessable income. New investors from 2027 onwards will not have this. Instead, they will use inflation indexation based on the old pre-1999 rules.
This is not a small difference. The inflation indexation method works when inflation is high and asset growth is steady. But once inflation moderates, the 50 per cent discount becomes significantly more generous than inflation indexation.
For existing property portfolios, this creates clarity: the grandfathering rules lock in your 50 per cent discount. But it also creates urgency. Decisions about selling, holding, or restructuring need to factor in the tax treatment. And there is a critical window—the next three years—where you can restructure your assets with minimal tax friction.
Part 1: Exit Planning and Timing Your Property Sales
If you are thinking about selling an investment property, the timing decision is now binary: before or after 30 June 2027.
If you sell before the changeover, you use the 50 per cent capital gains tax discount. You will be assessed on only half of your gain. If you sell after, and you are using inflation indexation, you need to calculate what the indexed cost base would be. In most real-world scenarios, this creates a higher tax bill than the 50 per cent discount.
The break-even point depends on inflation rates and how long you have held the property. But as a rule of thumb: if you have held the property for 10 or more years and inflation has been moderate (around 2 to 3 per cent annually), the 50 per cent discount is almost always better.
Example: You own a property bought for A$300,000 that is now worth A$600,000. Your capital gain is A$300,000.
Before July 2027: You include A$150,000 in assessable income (50 per cent discount applied). If your marginal rate is 45 per cent, your tax on the gain is approximately A$67,500.
After July 2027 (inflation indexation): Your indexed cost base might be A$420,000. Your capital gain is A$180,000. You include the full A$180,000 in assessable income. Your tax is approximately A$81,000. You have paid A$13,500 more.
This is before we even discuss negative gearing grandfathering or portfolio optimisation strategies. The point is: if you are on the fence about selling, the tax treatment favours action before the changeover.
Part 2: The Hold-versus-Sell Decision
The new CGT rules do not just affect how much tax you pay when selling. They affect whether holding the property remains financially rational.
For existing investors with negative gearing grandfathering, holding still makes sense because you are getting tax relief on losses every year. But for new investors buying existing properties from tonight onwards, there is no negative gearing benefit. The property needs to be cash-flow positive or neutral.
The hold-versus-sell decision becomes: Does the property have expected capital growth, combined with inflation indexation taxes, that justifies the ongoing costs and negative cash flow?
For many new investors, the answer is no. The capital growth expectations need to be substantially higher to offset the lack of negative gearing relief and the reduced tax efficiency of inflation indexation.
This is why structure matters. New investors can still build property portfolios. But they need to think in portfolio terms, not property-by-property terms. Buy new properties with negative gearing benefits. Refinance existing negatively-geared properties to fund those purchases. Structure the new property debt to be neutral or positive gearing. The portfolio works as one integrated unit.
For existing investors, you have another advantage: you can hold onto properties that might not make sense for new investors because your grandfathering still applies. But you should use that advantage strategically—refinancing your portfolio to buy new properties and maximise your negatively-geared positions—rather than assuming every existing property should be held forever.
Part 3: Restructuring and the Critical Three-Year Window
Here is the part many investors do not know: there is a three-year window (July 2027 to June 2030) where you can restructure your assets almost tax-free. This applies to both existing and new investors.
What does restructuring mean? Moving investment properties from personal ownership into a trust. Moving properties from one trust structure to another. Moving properties into a company structure for operating businesses. Normally, this triggers capital gains tax immediately on the unrealised gain. But during the rollover relief period, you can restructure without triggering that tax.
Why does this matter? Because the tax rules change again in July 2028, when discretionary trusts start paying a 30 per cent minimum tax on all taxable income (whether distributed or not). If you are holding investment properties in a discretionary trust, you need to decide: move to a fixed trust structure, move to a company structure, or move to personal ownership.
Without rollover relief, you would pay capital gains tax to move the property. With rollover relief, you do not. If a property is worth significantly more than you paid for it, this rollover relief could be worth hundreds of thousands of dollars in saved tax.
Example: Your discretionary trust holds three investment properties with a combined unrealised gain of A$500,000. Moving them to a fixed trust structure normally triggers A$225,000 in capital gains tax (at 45 per cent marginal rate with the 50 per cent discount). During the rollover relief window, you restructure with zero tax impact. After June 2030, rollover relief expires.
The three-year window is your chance to get your structure right before it becomes expensive to change again.
How This Connects to Negative Gearing and Overall Strategy
CGT strategy does not stand alone. It sits alongside negative gearing decisions, property selection, and portfolio structure. Here is how it connects:
If you are an existing investor with grandfathered negative gearing, your CGT strategy includes: maximising negative gearing positions while you can, refinancing to fund new purchases, and planning exit strategies for properties that have appreciated significantly (selling before 2027 if they are high-gain). Restructure during the rollover relief window to position yourself optimally for the discretionary trust changes.
If you are a new investor buying from July 2026 onwards, your CGT strategy includes: buying new properties (which retain negative gearing and 50 per cent CGT discount), staying out of negatively-geared existing properties, and structuring your portfolio for neutrally-geared or positively-geared cash flow. Plan to hold new properties for the long term because the tax efficiency disappears if you sell too soon.
And for everyone: make restructuring decisions during the three-year rollover relief window.
The 2026 budget changes are complex, but they are not a reason to stop investing. They are a reason to be more strategic about how you invest and when you restructure.
What You Should Do Now
This is where integrated advisory becomes essential. You need someone who understands your entire financial picture—your existing properties, your income, your trust structures, your other investments—to map out the CGT implications of different decisions.
If you are thinking about selling a property with a large gain, the maths is clear: selling before June 2027 is almost always better. That decision is worth making now. If you are a new investor, the decision to avoid negatively-geared existing properties is also clear.
But the bigger decisions—how to restructure your portfolio, whether to move between trust structures, how to align your property strategy with your overall tax position—these need integrated advice. Your accountant, financial planner, and mortgage broker need to be working from the same playbook.
At Simplify Finance, we work with your accountant and financial planner to build that integrated view. We help you understand the tax implications of different loan structures. We help you think about properties in portfolio context. And we help you time major decisions—like selling an appreciated property or restructuring your trusts—within the tax windows that actually exist.
If you want to talk through your specific situation, let us start with a portfolio review. We will map out what you own, how it is structured, what is coming, and what decisions matter most for you.