With questions coming thick and fast after the announcement of the 2026 Federal Budget, we have put together a plain English breakdown of what the 2026 Federal Budget proposes for home buyers, current homeowners, refinancers, and property investors, and what it means for your current and future home loan plans.
The 2026 Federal Budget does not change the rules for anyone who already owns a home or an investment property, or who is looking to get into the property market. The main proposed changes apply to new investment purchases of established properties from 13 May 2026, with negative gearing and capital gains tax rules updating from 1 July 2027. Current homeowners, refinancers, and first home buyers are largely unaffected.
On Tuesday night the federal government handed down its 2026 Budget. It comes at a time where cost of living has become a major issue for most households and house prices are up more than 400% compared to 1999, which is more than double wage growth. The conditions have been making it harder for younger Australians to buy their own property, and this became a key focus for the government.
The budget proposes a number of tax changes for property investors that the government anticipates will shift around 75,000 properties from investors to owner occupiers over the next decade. Treasury’s modelling expects the changes will slow house price growth modestly and eventually lead to lower rents, after an initial period of upward pressure. The same modelling also estimates around 35,000 fewer homes being built over the next ten years due to a dip in private investment, which the government aims to offset by spending on new infrastructure for housing lots.
Here is what the proposed changes might mean for you, depending on where you sit.
The biggest takeaway for first home buyers is what is not changing. The First Home Guarantee (5% deposit, no LMI, no income caps), Help to Buy, and the Queensland Boost to Buy scheme are all still active. The Queensland First Home Owner Grant of $30,000 for new builds under $750,000 is also still in place, though it is currently set to revert to $15,000 from 1 July 2026, so the deadline window is approaching for anyone building or buying a new home before then. See qro.qld.gov.au for current eligibility.
The longer-term shift for first home buyers comes from the proposed investor changes. By removing negative gearing on new purchases of established homes and replacing the 50% capital gains tax discount, the government expects to reduce some of the investor competition that first home buyers have been facing at auctions and open homes. It also expects an extra 75,000 first home buyers to enter the property market over the next decade as a result.
Two practical points. First, the changes do not start until 1 July 2027, so investor activity is unlikely to drop overnight. Second, the $1,000 instant tax deduction (from the 2026-27 financial year) and the Working Australians Tax Offset (from 2027-28) put a small amount of extra cash back in your pocket each year, which can support deposit savings.
If you are saving toward your first home, our blog ‘First Home Buyer Guide: Expert Conveyancing Tips‘, walks through handy tips for first home buyers from our trusted conveyancing partner Bond Property Lawyers and their Senior Executive Liam Howard.
There is nothing in the budget that directly changes the rules on refinancing, but there are two things worth knowing.
The first is the tax change. Every Australian taxpayer is set to receive a tax cut of up to $268 from 1 July 2026, then up to $536 a year from 1 July 2027. Combined with the new $1,000 instant tax deduction and the $250 Working Australians Tax Offset, the average worker will pocket the equivalent of around $54 a week back when all the measures are running. For most households, that goes straight into either savings or repayments.
The second is the rate environment around the budget. The Reserve Bank lifted the cash rate to 4.35% earlier this month, the third increase this year, and most lenders have already passed it on. If you have not reviewed your home loan recently, it is worth checking whether your current rate and structure still fit. A lot of people assume the bank that gave them their loan is automatically still the best fit. It often isn’t.
A Home Loan Health Check takes about ten minutes, and allows us to compare hundreds of options to find you the best of what the market has to offer, so that you know exactly what your savings could look like. All without committing you to anything or impacting your credit score.
This is where the most significant proposed changes sit. Three things to be aware of.
Negative gearing. From 1 July 2027, properties purchased from 13 May 2026 onwards will not be able to use negative gearing in the way most investors are used to, with the exception of new builds. Negative gearing is the strategy where the property owner’s expenses (mortgage interest, maintenance, rates, depreciation) are greater than the income from rent, and the losses are deducted from other taxable income such as wages. Under the proposed change, if you buy an established investment property from 13 May, you will still be able to deduct losses against income from other residential property you own, but no longer against your wages. Any unused losses can be carried forward to offset future residential property income.
If you have already signed a contract but have not yet settled, your purchase will still be eligible to be negatively geared under the existing rules until you sell.These changes apply to individuals and most trusts. Self-managed super funds may be excluded, so if you are looking at an SMSF purchase, confirm the position with your accountant before structuring it.
Capital gains tax. From 1 July 2027, the current 50% CGT discount is being replaced with cost base indexation plus a minimum 30% tax on the gain. In practice that means tax is calculated on your total profit minus inflation. For example, if a property’s value increased by 7% in a year and inflation was 4%, tax would be calculated on the 3% real gain (total growth minus inflation), and the rate applied to that gain cannot drop below 30% (pensioners and people on income support are exempt from the 30% minimum).
Properties purchased before 1 July 2027 will have a split treatment, where profits up to 30 June 2027 are taxed under the current rules and profits made after are taxed under the new rules. Investors in new-build residential properties can choose between the 50% discount or the new indexation model, whichever works better for their situation.
New builds are treated more favourably. Both negative gearing and the CGT discount remain available in their current form for new builds. This is deliberate. The government wants investor demand to support new housing supply rather than competing for established stock.
If you are working through what this means for your strategy, check out our blog ‘Property Investment: A Guide to Investment Property Loans‘, where we comprehensively break down how these loans work, and the potential benefits they can offer you.
Nothing changes for you. Properties purchased before 13 May 2026 are grandfathered. You can continue to negatively gear, and the 50% CGT discount still applies to gains accrued up to 30 June 2027 on properties you currently own. Profits made after 1 July 2027 on the same property will be taxed under the new indexation model.
If you have been considering selling, holding, or restructuring, the changes do shift some of the maths over a longer time horizon. That is worth a separate conversation with your accountant and your trusted mortgage broker, particularly if your borrowing capacity relies on negatively geared income from your portfolio. Our team are experienced in investment lending, and with a quick conversation will be able to understand your unique situation, and help you understand what options are out there right now.
There are three forces moving in different directions.
Working in your favour: the tax cuts and the $1,000 instant tax deduction lift your after-tax income, which lenders can include in their serviceability calculations. Working against borrowers: lenders are likely to update how they treat investor income from established properties once the negative gearing changes take effect. Existing investors are protected, but borrowing capacity for new investment purchases of established homes may tighten from 2027 onwards.
Working in the background: with the Reserve Bank cash rate at 4.35% and most lenders having passed it on, serviceability assessments are tighter across the board than they were twelve months ago. The simplest way to see where you actually stand is to run the numbers. Use our home loan borrowing power calculator for a quick estimate, then get in touch and we will run it across our panel for a more accurate view of your options.
The Mortgage and Finance Association of Australia (MFAA) reported that mortgage brokers settled 76.8% of all new residential home loans throughout March 2025, the highest market share on record. More Australians are going to brokers rather than just one bank, because the value sits in seeing the full picture rather than the first answer. And having someone take the time to understand your situation and needs, to tailor options specifically to you.
Our team often speak to clients that have been max lended with a bank or other home loan broker, limiting their home options and often costing them the home they were looking for. After pulling things apart and really understanding someone’s situation, our team have been able to increase clients’ borrowing power by $100,000 or more, just by making sure you are matched with the right lender.
Here is one we saw recently that ties directly into what a lot of people are wondering right now: with the consecutive rate rises, is it even worth looking at refinancing?
We had a customer come to us who was certain her bank had her on the best rate available. She told us, “I’ve been with them for years, my loan settled before the rate rises, and I figured with everything going on with rates my rate was as good as it was going to get.” Her thinking was reasonable. Rates have gone up three times this year, most lenders are passing the increases on, so surely everyone is sitting in the same boat.
When we actually looked at her loan, we found a lender on our panel that could give her a sharper rate, plus better redraw flexibility on a structure that suited what she wanted to do over the next few years. The move took her from 6.74% to 6.24% on her $650,000 loan. That came out to around $230 a month back in her pocket, even with three RBA hikes already passed through this year.
The bigger point: the budget did not change her situation. The budget did not change her rate. Her loan was just due for a proper look. A lot of borrowers right now are in the same position. Their loan settled some time ago, life has moved on, the rate environment has moved on, and no-one has looked at whether their current setup is still the right one. That review is what we do. Sometimes the answer is the loan you already have. Sometimes it is a sharper one. Either way, we will tell you straight, so that you are always on the best deal possible.
Regardless of your current home loan status, or where you are up to in your home loan journey, these changes make now the perfect time to act and put yourself in the best position moving forward.If you already own your home or an investment property, you can continue to utilise negative gearing to support servicing, and you are sitting on a pool of equity, which puts you in the best position to leverage these things and look into your next investment purchase.
If you are saving toward your first home, there are still multiple incentives available to support you and give you the leg up on purchasing your first home. This combined with less investor competition for existing properties should give first home buyers more opportunity to get into the market.
If you are planning to buy an investment property, the changes around negative gearing need to be taken into consideration, but are not a change that stops your investment plans. Not all investment property strategies rely on negative gearing, and if negative gearing is important to you, this is still available as long as your next purchase is a new build. A key member of our affiliate partner group is Quantum Buyers Agents, a local Sunshine Coast business we work along side that helps our customers do so much more than just find a property. Quantum’s mission aligns with our own, and is centred around helping people build their lifestyle, wealth and security through property. Nick and his team at Quantum Buyers Agents are able to do everything from finding the perfect property on and off market, to helping you negotiate and structure your offer, to setting out an investment plan and strategy that helps you build for the future and shape your long term property investment strategy.
If you are thinking about a new build (your own home or an investment), the budget treats new builds more favourably across the board. Another trusted partner we work with is Property Powerhouse, and their Experienced Investment Property Consultant Leisa Thomas-Lark, who specialise in off market recently completed and partially completed construction. Using their connections with builders and developers, they are able to find properties all over Australia, and help everyone from beginner property investors to seasoned find the perfect property for their needs.
Construction finance has its own considerations that are worth talking through before you commit. If you are interested in understanding more about construction loans, check out our construction loans page here.
If you are an investor, an aspiring first home buyer, or someone reviewing your current home loan, the budget has likely raised more questions than answers. Get in touch and we will walk you through what the proposed changes might mean for your situation. We do the heavy lifting and leg work to find you the best options for your situation from over 50 different lenders and hundreds of loan products, so that all you need to do is pick the option that suits you best.
Even if you are at the very early stages of considering your next home loan move, an initial chat to understand your needs and give you clarity on your options commits you to nothing and has no impact on your credit score. We are your trusted mortgage broker on the Sunshine Coast, and work with clients all over Australia.
Give our friendly team located in our Sunshine Coast office a call today, or if you prefer you can get started online here with our 5 minute online form.
 Rowdie Lang |
Rowdie has been a part of our Team since 2020. He has witnessed firsthand the ongoing evolution of the finance industry as technology continues to change the way customers' access financial services. He has a passion for helping people and relishes the opportunity to work alongside our teams every day as they help our customers financial dreams come true.
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Reviewed by: Nathan Drew ✅ Fact checked 📅 Last updated: May 16, 2026 |
