The Federal Government has announced major proposed changes to negative gearing and Capital Gains Tax (CGT) as part of the 2026 Budget. 

For real estate agents, this is more than a tax story. It has the potential to influence investor behaviour, buyer demand, off-the-plan activity, property conversations and the broader housing market over the coming years. And while there is still time before the proposed changes take effect, clients are already asking questions. 

Here’s what agents need to know, what may change and how to prepare for the conversations ahead. 

What has actually been announced? 

Under the proposed reforms, from 1 July 2027 the Government intends to: 

• Limit negative gearing on residential property investments to new builds only 

• Replace the current 50% CGT discount with a CPI indexation model 

• Introduce a 30% minimum tax rate on capital gains 

The Government says the changes are designed to improve housing affordability, encourage investment into new housing supply and reduce tax advantages linked to established investment properties. Importantly, there are significant transitional arrangements and exemptions. 

The biggest question agents are getting: What happens to existing investors? 

This is where a lot of confusion currently sits. The proposed changes are not retrospective. 

If an investor already owns an established residential investment property before 7:30pm AEST on 12 May 2026, they can continue to negatively gear that property into the future under the current rules. That means many existing investors are unlikely to be directly impacted. 

Properties purchased between the announcement date and 30 June 2027 may still be negatively geared during that period, but not after 1 July 2027. From 1 July 2027 onwards, only qualifying new builds would continue to have access to full negative gearing benefits. 

For agents, this distinction matters. Clients will want to understand: 

• Whether they are grandfathered under the existing rules 

• Whether buying before 2027 changes anything 

• What qualifies as a new build 

• How the changes may impact investment strategy 

• Whether investor demand will shift 

While agents should avoid giving financial advice, understanding the framework will help you navigate conversations with greater confidence. 

What qualifies as a “new build”? 

Under the proposed model, a qualifying new build generally includes: 

• A newly constructed dwelling on vacant land 

• Developments where an existing property is replaced with a greater number of dwellings 

However, the reforms specifically state that: 

• Knock-down rebuilds that do not increase supply would not qualify 

• Renovations alone would not qualify 

• Subsequent purchasers of a property would not receive the same concessions 

This could place increased attention on: 

• Off-the-plan apartments 

• House and land packages 

• Build-to-rent projects 

• Medium-density developments 

• New townhouse developments 

For agencies working heavily with developers or project marketing, this may become a significant talking point. 

What about Capital Gains Tax? 

Currently, many investors receive a 50% CGT discount when selling an asset held for more than 12 months. Under the proposed reforms, the Government intends to: 

• Remove the flat 50% discount 

• Reintroduce CPI indexation of the cost base 

• Apply a minimum 30% tax rate on capital gains 

The changes would apply to gains accrued after 1 July 2027. Existing gains built up before that date would still be treated under the current system. The Government argues this creates a fairer and more economically neutral system. However, there will likely be ongoing debate around how these changes affect investment appetite and long-term market confidence. For agents, the practical reality is simple: Clients are going to ask questions. And many will expect agents to at least understand the broad implications. 

What could this mean for the property market? 

While the reforms are still proposed changes, several likely market themes are already emerging. 

Increased focus on new developments 

If investors continue to receive stronger tax incentives for new builds, demand may shift more heavily toward: 

• New apartments 

• House and land packages 

• Development stock 

• Build-to-rent projects 

This could create stronger competition in those segments. 

Greater pressure on established investment stock 

Established investment properties may become less attractive to some investors over time, particularly highly leveraged buyers. That does not necessarily mean values will fall dramatically, but investor behaviour may shift. 

More investor uncertainty in the short term 

Whenever major tax reforms are announced, uncertainty follows. Some investors may delay decisions. Others may move quickly before proposed commencement dates. Agents should expect more questions around timing, structuring and investment strategy. 

First home buyer activity may increase 

The Government’s stated goal is to improve housing affordability and reduce competition from investors. Whether the reforms materially improve affordability remains to be seen, but the narrative around helping first home buyers is likely to influence buyer sentiment and media coverage. 

Why this matters for real estate agents 

This is ultimately a communication issue as much as a policy issue. Clients will look to agents for: 

• Market interpretation 

• Practical understanding 

• Confidence and clarity 

• Context around changing regulations 

Agents do not need to become tax advisers. But they do need to stay informed. The agents who understand the broader regulatory landscape are often the ones clients trust most when markets become uncertain. And increasingly, professionalism in real estate is tied not just to sales ability, but to compliance, education and informed client conversations. 

Final thoughts 

These proposed reforms are some of the most significant property tax changes announced in recent years. Whether they proceed in full, are amended or become politically contested over time, one thing is already clear: Real estate agents are going to be part of the conversation. 

The agencies that remain informed, practical and confident in how they communicate market changes will be best placed to support clients through the uncertainty. And in a changing market, trusted advice, professionalism and strong compliance awareness become even more valuable. 

Disclaimer 

This article is general industry commentary only and does not constitute financial, taxation or legal advice. Agents should encourage clients to seek independent professional advice regarding their individual circumstances.