Budget 2026: CGT and negative gearing get rewritten. Here's what it means for your numbers.

The Federal Budget handed down on 12 May rewrites the two tax settings investors have built strategies around since 1999: the 50% capital gains tax discount and the deductibility of property losses against other income. Most coverage so far has been political. This post is just the numbers.

We built a public calculator that runs the comparison for any scenario. The short version of what changed is below.

What's actually changing

Capital gains tax — from a flat 50% discount to inflation indexation, with a floor

Today: Hold an asset for at least 12 months, sell it, and only half the gain gets taxed at your marginal rate. A $500,000 gain on a property held 10 years adds $250,000 to your taxable income for the year.

From 1 July 2027: That 50% discount disappears. Instead, your original purchase price is uplifted by inflation across the holding period — only the real gain above inflation is taxed at your marginal rate. Underneath that sits a hard floor: the tax bill cannot fall below 30% of the nominal gain, no matter how much inflation eats up the headline number.

The intent is to tax the real return rather than the inflation-driven part of it. The 30% floor stops the policy from giving high-marginal earners a windfall in high-inflation years.

Negative gearing — kept for new builds, capped for everything else

Today: If your rental property runs at a loss (interest + costs exceed rent), you deduct that loss against your wage and other income.

From 1 July 2027: For established residential property acquired after 7:30pm on 12 May 2026, losses can only be deducted against:

1. Rental income (from any residential property you own), or
2. Capital gains on residential property when you sell

You can't deduct them against your salary. The deduction isn't lost — it gets carried forward — but the cash-flow benefit of negative gearing in the year you incur the loss is gone.

Properties owned on 12 May 2026 are exempt from the new rules and keep today's treatment. New builds are exempt too — investors in newly-constructed dwellings keep both negative gearing and the choice between the old 50% discount and the new inflation method.

What it does to a typical scenario

Walk through a property held 10 years, bought for $500,000, sold for $1,000,000, at a 37% marginal rate, assuming 2.5% inflation across the hold:

That's $55,200 more tax — a 62% increase. And it's the 30% floor, not the marginal-rate calc, that's driving the increase. At 45% the marginal-rate calc takes over and the gap narrows to ~$45k. At 16% the floor binds harder still.

Plug your own numbers into the CGT comparison calculator — purchase, sale, years held, marginal rate, inflation assumption — and you'll see the dollar difference for your scenario in real time.

What it does not change

Three things to be clear about, because the early coverage has been muddy:

1. Existing assets are grandfathered. Anything you owned on 12 May 2026 keeps today's 50% discount forever. The new rules only apply to assets you buy after Budget night, and only to gains arising after 1 July 2027.
2. Super rules are mostly intact. The non-concessional contribution cap moves from $120k to $130k on 1 July 2026, the transfer balance cap goes from $2.0M to $2.1M, but the broader super tax architecture (15% in accumulation, 0% in pension up to the cap) is unchanged.
3. CGT doesn't change for the principal place of residence. The main-residence exemption is untouched.

What this means for the way we think about investments

A few first-order effects worth thinking through:

Long-hold property at moderate marginal rates is where the rule bites hardest. That's most Australian investors. The 30% floor on nominal gains is a hard ceiling on how much inflation indexation can help you.

The "buy and hold for 20 years" story still works — but the after-tax IRR drops. Whether it drops enough to make alternatives (super, ETFs in concessional structures) more attractive depends entirely on your circumstances. This is exactly the kind of question a full plan answers better than a single calculator.

Existing portfolios get a one-time boost in value relative to new portfolios. If you already own an investment property, you keep the old discount. New investors going in after 12 May 2026 are working with a less generous tax framework. Don't be surprised if pricing in the established-property market reflects that over the next few years.

New builds become structurally more attractive because they keep both the 50%/inflation election and full negative gearing. The policy is explicitly trying to nudge investment capital toward new supply. Whether that flows through to housing affordability is a question for someone else.

What we're doing in JettWorth

The CGT comparison calculator is live now — public, no sign-up, shareable URL.

Over the next few weeks we'll be updating the projection engine itself: the CGT calculation in our plans currently uses today's 50% discount rules. We'll fold in the post-2027 rules and make sure projections that involve a property sale after 1 July 2027 use the right method, with grandfathering applied correctly for assets purchased before Budget night. The negative gearing changes need the same treatment in the cash-flow model.

If you want to model a specific property sale or career-change scenario against the new rules, sign up and run it in the planner. If you want a quick gut-check on a single sale, the calculator is the fastest path.

This article describes the policy as announced. Final legislation may differ — this is general information, not financial advice. Always consult a qualified financial adviser, accountant, or tax professional before acting on what you read here.