The 2026 Federal Budget was announced on the 12 May, with two major changes proposed, changing the rules of negative gearing and capital gains tax for property investors. The rule book on what helped a lot of Australians generate wealth will be changed if legislated.
Federal Budget 2026: Negative Gearing Changes Explained
From July 2027, you can only claim negative gearing on a residential property if it’s a new build and you’re adding supply to the market. For example, if you knock down and rebuild one dwelling, you’re not adding stock to the market. However, if you already own a property on 12th May 2026, you’ll be able to keep using the current rules.
If you buy an existing home after Federal Budget night, you can still claim property losses against rental income. Any unused losses can be carried forward, but they can’t be offset against other income such as wages.
2026 Budget CGT Discount Changes: What Property Investors Need to Know
Right now, most of the CGT discount benefit (about 83%) the highest‑income earners (the top 10%). The government says it wants the rules to be fairer and to encourage people to invest in new housing. In 2025, about 83% of new investor loans were still used to buy existing homes, not new builds.
From 1 July 2027 the Government will replace the 50% CGT discount with an inflation-linked discount, alongside a new minimum 30% tax on capital gains.
The big question is whether this helps young buyers, or just shifts investors into the same homes first-home buyers usually go for.
How the 2026 Federal Budget Impacts SMSF Capital Gains Tax
A question we hear often is: do SMSFs pay capital gains tax? The answer is yes, but at a concessional rate of 10% on assets held longer than 12 months in accumulation, and potentially 0% in pension phase, rates entirely unaffected by the 2026 federal budget CGT reforms.
One important thing many business owners don’t realise is that proposed CGT changes generally do not affect the CGT concessions inside superannuation.
An SMSF can still receive concessional tax treatment on investment gains:
• 10% CGT rate on assets held longer than 12 months in accumulation phase
• Potentially 0% CGT in pension phase
This is one reason why some business owners hold commercial property inside their SMSF as part of a long-term wealth and retirement strategy.
Combined with small business CGT concessions, this can create significant tax savings when selling business assets or property.
So is Super now the winner?
Is it becoming more beneficial for business owners to buy assets inside their SMSF rather than personally or through other structures?
If you want to explore your borrowing capacity options in vs out of your SMSF book in for an obligation free strategy session.
Important to note: Eligibility for the government’s four small business CGT concessions is complex. Get specialist tax advice to confirm how the rules apply to you and whether you qualify.
There are also strict rules about the order in which the tax concessions can be applied, and the tax outcome can differ significantly. Speak with a licensed tax adviser and a financial planner before acting or making any super contributions.
Our role at SMSF Mecca Finance will support you through your borrowing capacity, workshop and find a suitable lender aligned with your goals. We’ll work closely with your Financial Planner and Accountant.