Last night, Treasurer Jim Chalmers handed down the 2026-27 Federal Budget, describing it as “the most important and ambitious budget in decades.” For our customers, the headline changes are significant. There are reforms to negative gearing, capital gains tax, trust taxation, and small business write-offs, all of which have real implications for how people finance property and business assets.
As mortgage brokers, our job is to help you understand how these changes affect your borrowing decisions. For personalised tax advice, we always recommend speaking with your accountant or financial adviser. But here is what you need to know from a lending perspective.
Negative gearing rule changes for new property investors
This is the biggest shift in the budget for anyone considering an investment property loan.
From 1 July 2027, negative gearing on established residential properties will only be available to investors who purchased before 7:30pm AEST on 12 May 2026. If you buy an established property after that cut-off, you can still deduct rental losses against other rental income, but you will no longer be able to offset those losses against your wages or other income.
If you already own an investment property, or were under contract before Budget night, nothing changes for you. Your existing negative gearing arrangements are fully protected.
If you are considering buying a new build, the full negative gearing benefit is still available. The government has deliberately carved out new construction to encourage more housing supply.
What this means for your finance:
The tax benefit of negative gearing has historically been one of the factors that helps investors service an investment loan. With the negative gearing benefit removed for established properties, it is worth having a proper conversation with your broker about how the numbers stack up under the new rules before you commit to a purchase. We can help you model different scenarios to determine your borrowing capacity.
Capital gains tax changes for when you eventually sell
The 50% CGT (Capital Gains Tax) discount, which has been in place since 1999, is being replaced.
From 1 July 2027, instead of paying tax on only half your capital gain, the original cost of your asset will be adjusted for inflation (indexation), and a minimum 30% tax rate will apply to any remaining gain. For investors with large gains well above inflation, this means a higher tax bill on sale. For those with more modest gains, the impact may be smaller.
Importantly, this applies to assets held by individuals, trusts and partnerships. Superannuation funds are not affected by this change. Existing small business CGT concessions are also being preserved.
What this means for your finance:
For property investors using equity from existing investments to fund new purchases, the after-tax return on sale of those assets will change. If you are planning to sell an investment property to fund a new purchase or pay down debt, your accountant can help you understand the tax position. From a lending perspective, we can help you look at alternative ways to access equity without needing to sell.
Discretionary (Family) Trusts will be charged a higher tax rate from 2028
Many of our customers who run small businesses or hold investment properties through a family trust will want to note this one.
From 1 July 2028, a minimum 30% tax rate will apply to income distributed through discretionary trusts. This brings trust income broadly in line with how salary and wages are taxed, removing some of the flexibility that has traditionally made trust structures attractive.
There are exceptions, including fixed trusts, superannuation funds, deceased estates, charitable trusts and certain income types. The government is also providing a three-year restructuring window from 1 July 2027 for businesses that want to move out of a trust structure.
What this means for your finance:
If your borrowing capacity has been assessed based on income flowing through a trust, and that income is set to be taxed at a higher rate, your net income position may change. This could affect future serviceability assessments.
Small business instant asset write-off is now permanent
This is good news for our business lending clients.
The $20,000 instant asset write-off for small businesses (those with turnover under $10 million) is being made permanent from 1 July 2026. Previously extended year by year, it is now locked in. This means eligible assets costing less than $20,000 can be fully deducted in the year they are purchased, rather than depreciated over time.
What this means for your finance:
If you are using a business loan or equipment finance to purchase assets under $20,000, the immediate tax deduction improves your cash flow in that financial year. Better cash flow generally means a stronger financial position, which matters when we are assessing your ability to service a loan. This is also now a reliable planning tool rather than something you have to wait on the budget each year to confirm.
The Bottom Line for Borrowers
| Change | Who Is Affected | When |
| Negative gearing limited to new builds | Investors buying established property after 12 May 2026 | 1 July 2027 |
| CGT discount replaced with indexation + 30% minimum | Individuals, trusts and partnerships selling assets | 1 July 2027 |
| Discretionary trust 30% minimum tax | Family trusts and business trusts | 1 July 2028 |
| $20,000 instant asset write-off made permanent | Small businesses with turnover under $10M | 1 July 2026 |
Thinking about your next move?
These changes represent a genuine shift in the investment landscape, particularly for residential property. Whether you are thinking about your first investment property, refinancing an existing loan, or exploring business finance options, now is a good time to make sure your borrowing strategy reflects the new rules.
We are here to help you understand your options and what you can borrow under current lending conditions. For tax questions, your accountant or financial adviser is the right first call.
*This article is general in nature and does not constitute financial or tax advice. Please speak with an accountant or financial adviser regarding your personal circumstances*
Written by Andrew Whelan, General Manager – AP Group
AP Group are the leading pharmacy experts in Australia and specialise in helping first time buyers find the right pharmacy and secure the finance to support their purchase.
We connect existing owners with over 5000 ready and eager investors via our cutting-edge online Data Room. Our Data Room keeps confidential listing data secure and allows buyers to make informed decisions on each of our pharmacies for sale.
AP Group have built connections with all the major banks and a host of smaller lenders, ensuring that first time pharmacy buyers find a better deal.
About the Author:
When Andrew Whelan is not out pedalling his bike or looking after his two marvellous kids, he’s pedalling through pharmacy finance and strategy development.
Having been with AP Group since the beginning, Andrew has more than a decade experience in pharmacy and is an asset to the sales and finance division. He’s a numbers wizard, people person and sustainability champion — leading AP Group to achieve official Carbon Neutral Certification with Climate Active.
Before AP Group, Andrew spent more than a decade in the telecommunications and media industry including 7 years at Telstra in a variety of senior management roles and 3 years in the United Kingdom managing the commercial function for the British Sky Broadcasting — a time where it was the fastest growing broadband provider in the UK.
So it’s no surprise that he is well equipped to help customers with some of the biggest decisions they will ever make — buying a home or investing in a pharmacy — and helping to show them what’s truly possible.