Potential Changes to Capital Gains Tax and Negative Gearing

As seen in Woopi News March 2026

Capital Gains Tax (CGT) and negative gearing are often discussed, especially when housing affordability and tax reform are in the news. It is important to remember that nothing has changed recently and won’t change until legislation is passed or amended. We should expect to hear more on this as part of the May 2026 Budget update.

Capital Gains Tax (CGT)

Capital Gains Tax generally applies when you sell an investment for more than you paid for it. If the investment has been owned for more than 12 months, individuals are currently be entitled to a 50% CGT discount, meaning they pay tax on only half of the gain.

Possible changes currently being discussed include:

• Removing the general CGT discount
• Reducing the discount percentage
• Changing how capital gains are taxed

This may affect decisions about when to sell investments, particularly property.

Negative Gearing

Negative gearing occurs when the costs of maintaining the property exceed the rental income generated by the property. The loss can usually be applied against other income, triggering less tax payable, which is often refunded.

Potential changes currently being discussed include:

• Allowing negative gearing only on newly built properties
• Limiting the number of properties that can be negatively geared
• Deferring losses so they can only be applied to offset investment income in a future year

Historical Changes to Property Tax Deductions

• Travel costs related to residential rental properties ceased being deductible from 1 July 2017
• Depreciation on second hand assets for residential properties not deductible for assets purchased after 9th May 2017

Potential Transitional Rules

If future changes are introduced, transitional rules may apply. These rules are designed to reduce the impact on existing property owners. Examples may include:

• Keeping current rules for properties already owned (grandfathering)
• Delaying the start of new rules to allow investors time to make decisions