Understanding the Proposed Changes to Negative Gearing and Capital Gains Tax

3 min read

Jul 2, 2026 10:45:00 AM

Understanding the Proposed Changes to Negative Gearing and Capital Gains Tax

If you've been following property news recently, you've probably seen discussion around the Australian Government's proposed changes to negative gearing and capital gains tax (CGT).

While these reforms are not proposed to commence until 1 July 2027 (subject to legislation), they have already generated significant discussion throughout the property industry.

For property investors in Fairfield and across Australia, it's a timely reminder that government policy can influence the broader investment landscape.

While it's too early to know exactly how the market may respond, understanding the proposed changes can help you stay informed.

What has been proposed?

The Australian Government has announced a number of proposed tax reforms affecting residential investment properties.

Some of the key proposals include:

Negative gearing for many established residential investment properties purchased after the commencement date may be restricted.
Newly constructed residential properties would continue to be eligible for negative gearing under the proposed rules.
Existing eligible investment properties purchased before the proposed commencement date are expected to retain their current tax treatment through grandfathering provisions.
Proposed changes to the Capital Gains Tax (CGT) discount for future property purchases are also scheduled to commence from 1 July 2027, subject to legislation.

At the time of writing, these remain proposed legislative changes and have not yet taken effect.

Why is the property industry talking about these changes?

The proposed reforms are designed to encourage investment in new housing supply while changing the tax treatment of some future investments in established residential property.

Whether these changes influence investor behaviour remains to be seen.

Property markets are shaped by many factors, including:

Housing supply and demand
Interest rates and lending conditions
Population growth
Government policy
Local economic conditions

The proposed tax changes are simply another factor that investors may consider alongside these broader market influences.

What could this mean for Fairfield property investors?

Fairfield continues to benefit from population growth, infrastructure investment and ongoing development across Western Sydney.

As with any proposed policy change, investors may choose to monitor how the legislation progresses before making long-term decisions.

For many investors, the focus is likely to remain on understanding the broader picture rather than responding to a single policy announcement.

Property investment decisions often involve considering a range of factors including location, borrowing capacity, cash flow, long-term objectives and professional tax advice.

Why staying informed matters

Tax legislation can change over time, and understanding proposed reforms can help property owners and investors ask informed questions when reviewing their financial position.

If you're considering purchasing an investment property, refinancing an existing investment loan or simply wanting to better understand your home loan options, it's worth staying informed as more information becomes available.

It's equally important to discuss any tax implications with your accountant or financial adviser, as they can provide advice based on your personal circumstances.

Supporting your investment journey

Whether you're purchasing your first investment property or expanding an existing portfolio, understanding your borrowing options is an important part of the process.

At Rate Money Fairfield, our Home Loan Specialists work with self-employed Australians, tradies, business owners and investors to help them understand the lending options that may be available based on their individual circumstances.

To learn more about investment property lending, visit:

https://ratemoney.com.au/investment-properties

Final thoughts

The proposed changes to negative gearing and Capital Gains Tax represent one of the more significant property policy announcements in recent years.

While the legislation is still progressing and many details are subject to parliamentary approval, staying informed is one of the best ways to understand the broader property landscape.

As more information becomes available, it will be interesting to see how these proposals develop and what they may mean for Australia's residential property market.

Key Statistics & Dates

Proposed commencement date for the reforms: 1 July 2027 (subject to legislation).
Existing eligible investment properties purchased before the proposed commencement date are expected to be grandfathered under the current rules.
The proposed reforms aim to encourage investment in newly constructed housing while changing the tax treatment of many future purchases of established residential investment properties.

Sources