What did the 2026 Federal Budget change?

In the May 2026 Federal Budget, the Government announced changes to CGT and negative gearing. The aim is to make it easier for people buying a home to live in to compete with property investors.

The key changes

CGT

The existing 50% CGT discount will continue to apply to capital gains accruing up to 30 June 2027. From 1 July 2027, it will be replaced with a new system based on cost-base indexation, alongside a 30% minimum tax rate on capital gains.

Negative Gearing

From 1 July 2027, negative gearing for future investment properties will generally only apply to newly built homes. Existing investments are protected from the new negative-gearing restrictions if they were held at 7:30 pm AEST on 12 May 2026. However, the CGT changes are based on when the capital gain accrues, so existing investors should not assume that all future gains will automatically receive the current 50% CGT discount.

But there is an important distinction for new-build homes.

Investors buying eligible new-build properties may be able to negatively gear their investment and retain the existing 50% CGT discount, subject to satisfying the relevant legislative requirements.

Buyers should obtain independent tax advice based on their individual circumstances. The availability of tax deductions or specific CGT treatment is not guaranteed. This is relevant to The Hills of Carmel (THOC), where all homes are new builds. The changes mean investors can continue to benefit from the tax advantages available to new-build properties, while the broader reforms may reduce investor competition for established homes. The legislation passed Parliament on 25 June 2026 + Royal Assent on 26 June 2026.

What does this mean for first home buyers?

The Government estimates the combined CGT and negative gearing changes could help around 75,000 additional Australians buy their first home over the next 10 years. The thinking is simple: Less incentive to invest in existing homes could mean less competition from investors and more opportunities for first home buyers. Up until now, first home buyers and investors often competed for the same houses and units.

If some investors decide not to buy existing properties, first home buyers could have more opportunities to get into the market. At the same time, the Government is encouraging investment towards newly built homes, meaning communities such as THOC can continue to attract both investors and owner-occupiers.

Will this make homes cheaper?

Not necessarily and not immediately. The early impact has been mixed. Some first home buyers have reported seeing less competition from investors and more opportunities to buy. At the same time, other buyers are still facing challenges with interest rates, borrowing capacity and the cost of living.

For example, 7NEWS reported that first home buyer loan lodgements were 11% lower in the four weeks after the Budget than in the four weeks before it. However, it also noted that applications had already been trending down as interest rates increased. This means it is too early to say the tax changes alone are responsible for movements in property prices or buyer activity.

What could change for first home buyers?

Potentially less competition

Some investors may become more cautious about buying existing properties.

More opportunity to buy

If fewer investors compete for existing homes, first home buyers could have a better chance at auctions and private sales.

More investment in new homes

The negative gearing changes are designed to encourage investors towards newly built properties. Investors in eligible new builds can continue to negatively gear these properties and have the option to retain the existing 50% CGT discount.

The bottom line

The Government’s changes are designed to shift the balance towards people buying homes to live in, while encouraging property investment towards new housing.

For first home buyers, this could mean less competition from some investors and more opportunities to buy.

But the changes are only one part of Australia’s housing affordability challenge. In short: the goal is to give first home buyers a better chance but it doesn’t guarantee cheaper homes.

What happens next?

The negative gearing changes for future investment properties are due to take effect from 1 July 2027, while existing investors are protected by grandfathering arrangements. For investors in eligible new-build properties, the existing 50% CGT discount will remain available as an option, meaning new-build communities such as The Hills of Carmel can continue to appeal to investors under the new tax settings.

Your first home is more than just a purchase – it’s the beginning of a new chapter. With the right guidance, government support and a welcoming community, that chapter can start sooner than you think.

At The Hills of Carmel, we’re proud to support first home buyers with thoughtfully designed homes, connected neighbourhood spaces and a community built for long-term living.

Visit our Sales Centre or get in touch with our team today to explore available homes and learn how your first home journey can begin at The Hills of Carmel.