Negative gearing is on the chopping block. The CGT discount is being replaced. The budget drops in hours, so here is what you need to know before the Treasurer stands up.
The two changes that will reshape your property strategy
The whispers became a roar this week. Tonight, Treasurer Jim Chalmers is expected to confirm the most significant overhaul of property-related tax rules in nearly three decades. For investors who have built their strategy around the status quo, this is the wake-up call.
Negative gearing: fully abolished, not just capped
Reports from multiple sources indicate the government will go further than expected. Rather than capping negative gearing at a second property, it is expected to be scrapped entirely. This is not just an incremental change. For many investors, it means a significant restructure of annual cash flow and tax planning, starting from tonight.
Assets bought before tonight will be grandfathered, but your next purchase will be subject to entirely new rules.
The CGT discount: replaced by inflation indexation
The long-standing 50% Capital Gains Tax discount is expected to be replaced with a return to inflation indexation. Under this model, only real gains above CPI growth are taxed at your marginal rate. Assets acquired after tonight will be subject to the existing 50% discount only until 1 July 2027, after which the new rules apply. Assets bought before tonight will be subject to a hybrid model.
The practical impact depends entirely on how long you hold and how inflation moves. This changes your exit strategy fundamentally.
We saw firsthand that the industry gives homeowners homework, instead of results. We built Bheja.ai to change that.
Your rate is already working against you!
Even before tonight's budget, rates have moved to 4.35%, the highest in years, following the RBA's third consecutive hike in May. This has added roughly $130 a month to a $750,000 loan. Many Australians are still sitting on their existing rate, effectively paying a loyalty tax to their lender, simply because they have not had time to check.
Three things to do before the Treasurer stands up
- Check your loan health now: Use Bheja.ai's Check feature to see how your current rate compares to the market before any post-budget volatility hits lenders' pricing.
- Optimise your cash flow: If negative gearing changes as expected, your cash flow becomes critical. Use the Save tool to see if switching lenders could put money back in your pocket each month, independent of your tax strategy.
- Set your monitor: Markets will react to tonight's announcements. With rates already elevated and inflation uncertain, the Monitor tool will alert you the moment a competitive deal emerges, so you don't have to wait for headlines to tell you what to do.
By tomorrow morning, the rules will have changed. Check your loan health before markets react.
Takes 2 minutes. No paperwork. No broker appointment.
