Client Note



CGT & Negative Gearing Changes — Investment Implications

Core change

The Budget proposes replacing the 50% CGT discount with CPI indexation combined with a 30% minimum tax from 1 July 2027. Negative gearing is also being restricted for new residential property investments. Certain as yet undefined “new builds” are to be excluded from the changes.

CGT Implications

• Higher effective tax on most growth assets exceeding inflation
• Reduced flexibility in timing capital gains to optimise tax outcomes
• Pre-CGT assets become taxable on gains after 1 July 2027
• Increased reliance on valuations and dual record keeping

Negative gearing implications

• Losses on new properties quarantined against property income and gains
• Reduced attractiveness of leveraged residential investment
• Existing assets largely grandfathered but structurally impacted over time

Key risks

• Underestimating effective tax on long-term capital growth
• Costly valuation requirements and compliance burden
• Reduced after-tax investment returns

• Main residence as an unproductive “go to” asset class may face future tax policy risk
• Structural mismatch between investment strategy and tax outcomes

Immediate considerations

• Prepare for asset valuations prior to 1 July 2027
• Reassess long-term investment holding strategies
• Review property portfolios in light of reduced tax benefits

• Reconsider tax profiles of growth assets, overall asset mix, and holding structures
• Avoid premature restructuring until final legislation is known

Our view

These changes significantly alter the economics of growth investing and property ownership. The practical outcome is a shift toward higher taxation of capital and reduced reliance on tax-driven investment strategies. Decisions should now be based on after-tax returns under the new rules rather than legacy assumptions.



Chancellors Chartered Accountants | Private Wealth Advisory