Our take on Budget 2026: What the Negative Gearing Changes May Actually Mean for Perth Property

So the Federal Budget dropped on 12 May with some pretty big moves on negative gearing and capital gains tax. Here's our take on what it might mean and what we think could play out in the Perth property market.

Our thoughts on what the latest budget may mean for the Perth Property Market

What's Actually Changing?

From 1 July 2027, investors who buy established rental properties won't be able to offset rental losses against their salary or other income anymore. Those losses can only be offset against other rental income or future capital gains. In plain English, negative gearing as we know it is getting axed for anyone buying an established investment property from here on in.

If you already own an investment property, or were under contract before the budget announcement on 12 May, you're fine. The old rules still apply to you.

On capital gains tax, the existing 50% CGT discount is being replaced with a new system. It's a little more complex to explain, but rest assured you will pay more tax and be worse off.

Worth noting: these are still proposed changes. They haven't passed parliament yet, so nothing is set in stone, but given the scale of what's on the table it's worth paying attention.

The New Build Push and Why It Might Not Go to Plan

Here's where it gets interesting. New builds are completely exempt from the negative gearing changes. Investors who buy newly constructed properties can still access negative gearing and the existing capital gains tax discount.

The government's logic is pretty clear. Australia isn't hitting its housing construction targets, and they need to pull another lever to get investors building new homes rather than buying established stock. Makes sense on paper.

The problem? Perth already can't build homes fast enough. We're short on trades, materials costs have gone through the roof, and build timelines keep blowing out. So pushing more investor demand into new construction, when the industry is already struggling to keep up, is going to be interesting to say the least. More demand doesn't conjure more tradies out of thin air.

What We Think Happens Next

Our take is that fewer investors will bother with established rental properties. The tax benefits that made it worthwhile are largely gone for new buyers, and most people aren't going to sign up for that knowingly.

For renters, this could be rough. If investors exit the established property market, fewer homes end up as rentals. Perth is already tight on rental supply and this doesn't help. And if investors do pivot to new builds instead, that segment gets more competitive, which could push prices up in the house and land package and apartment market. That's the exact space a lot of first home buyers are trying to get into. More competition from investors chasing the same new build product isn't great news for them either.

The Bottom Line

We're not economists and we're definitely not financial advisers, so if this affects your situation get proper advice from someone who is. But from where we sit, watching the Perth market day to day, this feels like a policy that could create some unintended headaches. The rental market could tighten, first home buyers in the new build space might find it harder going, and whether the construction industry can actually absorb the extra demand is a very open question.

We'll be watching with interest. It's going to be a telling 12 to 18 months.