The 2026-27 budget has not closed the door on investment property. It has, however, fundamentally changed which door to use. For middle class investors purchasing an established property in their own name, or a trust, geared against a salary, that playbook is now effectively retired. The question is what replaces it.
The critical distinction that most coverage has glossed over is that the new rules do not apply uniformly. Properties owned on 12 May 2026 are exempt from the negative gearing changes until sold, and investors in genuinely new dwellings can still negatively gear and choose between the 50% CGT discount or the new indexation model at sale. For a middle class investor who does not yet own an investment property, the new build carve-out is the most accessible entry point remaining. The trade off is that new builds require more disciplined yield and location analysis, the margin for error on a growth-dependent strategy has narrowed considerably.
On structure, the answer has shifted materially. Discretionary trusts, previously a core tool for income splitting and tax minimisation, now face a 30% minimum tax from 1 July 2028. The income distribution benefit that made them attractive to families with lower income beneficiaries has been substantially compressed. Widely held managed investment trusts and superannuation funds, including SMSFs, are proposed to be excluded from both the negative gearing changes and the new CGT minimum tax. That exemption makes the SMSF structurally the most advantaged vehicle available. The effective CGT rate on long held assets inside super remains at 10% in accumulation phase, versus a minimum of 30% outside super from 1 July 2027, and zero per cent in pension phase.
The SMSF is not the answer for everyone though. Limited Recourse Borrowing Arrangements typically require combined member balances of $250,000 or above before leveraged property acquisition is viable, especially accounting for fees. Investors below that threshold are better served by the new build strategy in their own name, with losses quarantined against future property income rather than waged salary. Additionally, moving existing properties into a new structure is not straightforward, it can trigger both a stamp duty liability and a CGT event on the transfer, and the long term benefit must be modelled against that immediate cost. The structure decision that must be in place pre-purchase now carries more weight than the asset decision itself.
Financial Disclaimer. This content is general in nature and has been prepared without taking into account your personal objectives, financial situation, or needs. It does not constitute financial product advice under the Corporations Act 2001 (Cth). Before acting on any information contained in this post, you should consider whether it is appropriate for your circumstances and, if necessary, seek independent financial advice. References to specific companies, markets, prediction tools, or investment strategies are for informational and educational purposes only and do not constitute a recommendation to buy, hold, or sell any financial product. Past events and probabilistic frameworks discussed are not reliable indicators of future performance.