The 2026-27 Federal Budget contains a range of proposed changes that are particularly relevant from a financial planning perspective. While many of the measures are still subject to legislation, they reflect a continued focus on easing cost-of-living pressures, improving housing affordability and reshaping aspects of the tax system.
While some measures may provide immediate benefits, others could create longer-term impacts for investors, retirees and families planning for the future.
Below is a summary of some of the key announcements and what they may mean for you.
Proposed changes to property investment rules
The Budget also included significant proposed changes to property investment taxation.
The Government has announced plans to:
- Restrict negative gearing on future purchases of established residential investment properties
- Adjust the current Capital Gains Tax (CGT) discount rules
- Protect existing property investors by allowing current rules to continue to apply to properties already owned, so they are generally not impacted by these changes
Importantly, newly built properties are expected to retain more favorable treatment.
What this could mean for you
If you already own investment properties, the immediate impact may be limited because the proposed changes are not expected to apply to properties you already hold.
However, if you are considering purchasing an investment property in the future, particularly an established property, the after-tax benefits may reduce significantly.
This could influence:
- Whether property remains attractive as an investment strategy
- The type of property purchased
- Whether alternative investments become more appealing
Why SMSF property investing may become more attractive
One potential consequence of these proposed changes is that investing in property through superannuation, particularly via a Self-Managed Super Fund (SMSF), may become comparatively more attractive for some investors.
This is because:
- Superannuation already operates within a concessional tax environment
- Investment earnings within super are generally taxed at a maximum of 15%
- Capital gains on assets held longer than 12 months within super may effectively reduce to 10%
- In retirement phase, investment earnings and capital gains may potentially become tax-free.
In addition, negative gearing inside super is generally less reliant on personal tax deductions, as the primary benefit often comes from:
- Lower tax rates
- Long-term capital growth
- Concessional contribution strategies
- Debt reduction over time.
As a result, if negative gearing benefits outside super are reduced, the relative tax effectiveness of holding property within super may improve.
Example
Currently, if an investment property generates a taxable loss, that loss may be offset against salary income.
Under the proposed rules, future investors purchasing established properties personally may lose some or all of that benefit.
By comparison, an SMSF investor may still benefit from:
- Lower tax rates on rental income
- Concessional tax treatment on future capital growth
- Potential tax-free income in retirement phase.
This does not mean SMSFs are automatically appropriate, as they involve additional complexity, compliance obligations and restrictions, but it may increase interest in superannuation-based property strategies.
Changes to Capital Gains Tax (CGT)
The Government has also proposed changes to how capital gains are taxed in the future.
Currently, many investments held longer than 12 months receive a 50% CGT discount. The proposal would instead move toward a system that adjusts gains for inflation.
What this could mean for you
For long-term investors, this could potentially:
- Increase tax payable on investment gains
- Reduce the attractiveness of highly geared growth assets
- Make tax planning more important when selling investments
It may also encourage investors to:
- Hold assets longer
- Consider alternative structures
- Diversify investments more broadly
Why superannuation structures may become more valuable
If CGT concessions outside super are reduced, superannuation structures may become increasingly valuable from a long-term tax planning perspective.
Within superannuation:
- Capital gains are generally taxed concessionally
- Assets supporting retirement pensions may potentially be sold tax-free
- The concessional tax environment may become relatively more attractive compared to personal ownership structures.
For investors focused on:
- Long-term wealth accumulation
- Retirement planning
- Intergenerational wealth transfer
this could increase the appeal of building assets within superannuation over time.
Example
If an investment property increased substantially in value over 10 years, the future tax outcome under the new rules may differ considerably from the current system.
For example:
- A personally owned investment property may face a higher effective CGT outcome under revised rules
- Whereas a property held within an SMSF and ultimately sold during retirement phase may potentially incur little or no capital gains tax.
Again, this needs to be balanced against:
- Contribution caps
- Liquidity requirements
- Borrowing restrictions
- Ongoing compliance obligations within SMSFs.
Housing and cost-of-living measures
The Budget continues to focus heavily on housing affordability and cost-of-living relief.
Measures announced include:
- Additional funding for housing infrastructure
- Support for higher-density housing developments
- Continued household relief initiatives.
What this could mean for you
For younger Australians and first-home buyers, these measures may help improve housing supply over time and reduce competition from investors.
For families and retirees, any cost-of-living support may assist with managing ongoing expenses during a period of elevated inflation and higher interest rates.
Example
A first-home buyer may find:
- Slightly improved access to new housing developments
- Reduced investor competition in some parts of the market
However, borrowing capacity, interest rates and deposit requirements will still remain major factors.
Key takeaways
While many of the Budget measures are still proposals and will need to pass legislation, they highlight a continued shift toward:
- Supporting wage earners and first-home buyers
- Reshaping property investment taxation
- Encouraging new housing supply
For investors and retirees, the changes reinforce the importance of:
- Reviewing investment strategies regularly
- Understanding future tax implications
- Maintaining diversified portfolios
- Considering long-term cash flow and retirement objectives
In particular, if property taxation outside super becomes less favourable over time, superannuation structures — including SMSFs for appropriate clients — may play an increasingly important role in long-term investment and retirement planning strategies.
As always, the impact of any Budget changes will depend on your personal circumstances, and it is important to seek advice before making financial decisions based on proposed legislation alone.
If you have any concerns regarding the new Budget, or need further clarification, please reach out to the Financial Planning team:
E financialplanning@highview.com.au
T (03) 5990 1000
Richard Vaughan
Senior Financial Adviser
Highview Accounting & Financial
