If you own an investment property — or you’re thinking about buying one — the 12 May 2026 Federal Budget put three pieces of news on your desk:
- Negative gearing against your salary will be restricted to new builds only, from 1 July 2027.
- The 50% capital gains tax discount will be replaced with an inflation adjustment plus a 30% minimum tax, also from 1 July 2027.
- Discretionary trust income will face a 30% minimum tax from 1 July 2028.
Every news article has covered the policy. None of them tell you what it means for your property. So we built a calculator that does.
Run it here: finhub.net.au/calc/budget-tax-reform-calculator.html
Why a Calculator and Not Just an Explainer
Because the reform doesn’t hit every investor the same way. The Government has built three “buckets” into the design, and which bucket you fall into depends on a single date — when you signed your purchase contract.
The dollar impact across the same property can swing tens of thousands of dollars depending on your bucket, your hold period, your loan size, your marginal tax rate, your depreciation claims, and whether you hold it personally, jointly with a spouse, in a discretionary trust, in a company, or in an SMSF. A generic article cannot tell you that. Only your actual numbers can.
The Three Buckets, Plainly
Bucket A — Existing investors, protected by grandfathering. You signed your purchase contract on or before 7:30pm AEST on 12 May 2026. Negative gearing against your salary stays available for the life of the property. When you eventually sell, the part of your capital gain that accrued before 1 July 2027 keeps the old 50% discount; the part that accrued after gets the new inflation adjustment plus 30% minimum rate.
Bucket B — Transitional buyers, bought during the change-over. You signed between 13 May 2026 and 30 June 2027. You can negatively gear against your salary for any year before 1 July 2027 — but not after. From 1 July 2027 onwards, any rental losses get “trapped” — they can only offset other residential rent or capital gains, not your salary.
Bucket C — Post-reform buyers. Contract from 1 July 2027 onwards. If you buy an established residential property, no salary negative gearing from day one. If you buy a genuinely new build — apartment off-the-plan, knock-down rebuild that adds more dwellings, or construction on vacant land — you keep negative gearing AND can elect the better of the old 50% discount or the new inflation method at sale.
What “New Build” Actually Means Under the Reform
Treasury was strict about this. A new build is:
- A newly constructed apartment bought off-the-plan
- A duplex constructed through a knock-down rebuild that replaces a single house with multiple dwellings
- Any residential construction on previously vacant land
- A newly built property occupied for less than 12 months before being first sold
A new build is not:
- An extension that adds bedrooms to an existing house
- A free-standing knock-down rebuild that replaces one house with one house
- A granny flat attached to an existing property
- A newly-built property that has been lived in for over 12 months before resale
What About Discretionary Trusts?
If you hold property in a discretionary trust, there’s a separate piece of the reform that bites from 1 July 2028. The trustee will pay a minimum 30% tax on the trust’s taxable income. Beneficiaries still receive their distribution and a non-refundable credit for that tax — but corporate beneficiaries (“bucket companies”) don’t get the credit, which effectively stacks the tax.
The reform also includes a three-year rollover relief window from 1 July 2027 to 30 June 2030, during which you can restructure out of a discretionary trust into a company or fixed trust without triggering capital gains tax on the way out. If your trust no longer makes sense under the new minimum tax, this window is your planning runway.
How the Calculator Works
The maths behind the tool is taken directly from Budget Paper No. 1 Statement 4 and the three Treasury explainers released on Budget night. The calculator has been verified against Treasury’s own worked examples — every result is within $50 of Treasury’s published figures.
You enter your scenario in four short steps: your income and ownership structure, the property and acquisition date, your annual cash flow including depreciation, and your sale assumptions. The calculator returns: which bucket you’re in, your tax position today vs under the reform, your net cash position, and a year-by-year breakdown.
What This Means for You
If you bought before 12 May 2026 — your existing position is protected. Run the calculator to see how much your end-of-hold position changes when the CGT split kicks in.
If you’re planning a 2026 or 2027 purchase — the contract date matters. The calculator shows you what trapped losses look like and the dollar cost over your hold period.
If you hold property in a discretionary trust — you have planning options worth modelling. The rollover relief window is open from 1 July 2027 to 30 June 2030.
A loan structure review alongside your tax planning can also reveal whether your current financing remains optimal. Your borrowing capacity may also shift depending on how rental income and deductions are recalculated by lenders under the new regime.
One Caveat
This is an estimation tool, not personal tax advice. It can’t know your exact marginal rate in the year of sale, your other income interactions (HECS, Medicare Levy Surcharge thresholds, private health rebates), your state land tax, or how your depreciation schedule actually unwinds. For an accurate position, your accountant and I need to sit at the same table.
Run the Calculator
Run the calculator here, and if the result surprises you, call or text Daniel Nguyen on 0430 11 11 88 — we’ll work through what it means for your portfolio.
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