If you were watching the news from Canberra last night, you’ll know the landscape of Australian real estate just shifted significantly. The 2026-27 Federal Budget has arrived, and it is arguably the most consequential for the property sector in a generation.

With an aggressive “supply-first” agenda and a complete reset of investor tax structures, there is a lot to unpack. At Holdsworth Real Estate, we’ve spent the morning dissecting the fine print to understand what this means for our Perth community, from first-home buyers to long-term investors.

1. The Investor Earthquake: Negative Gearing & CGT Reset

The headline of the night is a fundamental restructuring of property taxes. The government is clearly trying to tilt the scales in favour of owner-occupiers and “new” supply.

The End of Negative Gearing for Established Homes

In a move that caught the industry by surprise, the Treasurer announced that negative gearing for established residential properties is being abolished, effective July 1, 2027, for any property purchased after 7:30 pm on May 12, 2026 (last night).

  • The Rule: If you bought an existing house or apartment last night or moving forward, you can no longer deduct net rental losses against your salary or wages.
  • The Silver Lining: These losses aren’t gone; they are “quarantined.” You can carry them forward to offset future rental income or capital gains when you eventually sell.
  • The Incentive: Crucially, new builds remain exempt. The government is essentially saying: “If you want a tax break, you have to help us build more houses.”

Capital Gains Tax (CGT) Overhaul

The simple 50% CGT discount is also being phased out. It is being replaced by a cost-base indexation model (similar to the system used pre-1999) and a new 30% minimum tax rate floor for capital gains.

Wait, what about my current house?

Don’t panic. The Budget includes strict grandfathering provisions. If you already own an investment property or were under contract before 7:30 pm last night, your current negative gearing and CGT arrangements stay exactly as they are.

2. Supply Injection: Unlocking the “Building Blocks”

We’ve always said you can’t build houses without pipes and roads. The Budget addresses this with a new $2 billion Local Infrastructure Fund.

  • The Target: This funding is designed to unlock “shovel-ready” land by providing the water, power, and sewerage infrastructure needed for up to 65,000 new homes nationwide over the next decade.
  • The WA Angle: For our local market, this is vital. With WA’s construction workforce already stretched thin, the Budget also announced that all mandatory Australian Standards will now be free for builders and trades to reduce compliance costs and red tape.
  • AI Approvals: The government is also unleashing AI-enabled digital tools to break the bottlenecks in environmental and planning approvals.

3. What This Means for Prices and Rents

Treasury’s own modelling suggests these changes will have a cooling effect on the market, but not a crash.

  • House Prices: Growth is forecast to temper—growing by roughly 2% less over the next few years than it otherwise would have. This is intended to give first-home buyers a slightly lower entry point.
  • Rents: While there are concerns about investors exiting the market, Treasury estimates the impact on rents will be “gradual,” potentially increasing median rents by less than $2 per week.
  • Foreign Investment: The ban on foreign purchases of established dwellings has been extended again, now running until June 30, 2029, keeping the focus on local buyers.

4. Wins for Small Business

For the many “mum and dad” investors who run their own businesses, the $20,000 instant asset write-off has finally been made permanent. This is a huge win for tradies and small business owners in the property sector, providing much-needed certainty for equipment and tool upgrades.

The Holdsworth Perspective

The 2026-27 Budget is a clear signal: the era of “passive” property investing in established houses is being de-incentivised.

If you are looking to grow a portfolio, the “new” market—apartments, townhouses, and new builds—is where the tax advantages now live. If you are a first-home buyer, you’ve just been given a significantly larger seat at the table as investor competition for existing stock is expected to cool.

Are you wondering how these grandfathering rules affect your current portfolio? Or are you ready to pivot your strategy toward new builds to keep your tax benefits?

Reach out to the team at Holdsworth Real Estate. We’ve been through many Budget cycles, and while the rules have changed, the value of expert local advice never does. Let’s make sure you’re positioned to thrive in this new landscape.