The 2026 Federal Budget has affected more than just the property market; it has implications for broader investment activity as well.
From 1 July 2027, the Government plans to abolish the well-known 50 per cent Capital Gains Tax (CGT) discount and replace it with a cost-base indexation model and a 30 per cent minimum tax on net capital gains. This will affect a range of assets held by individuals, trusts and partnerships. Most significantly, purchasers of new residential property will be given a choice between the current 50 per cent CGT discount and the new indexation model. This creates a compelling point of difference for new builds.
For the average Australian, this may sound like dry tax policy. However, the market impact could be far more significant. As investments such as shares, ETFs, managed funds, cryptocurrency, commercial assets and established investment properties become less tax-friendly, capital may start looking for a more attractive home. New residential construction could become that destination, supported by the proposed CGT choice, continued access to negative gearing and depreciation benefits that often apply to new builds.
| Asset or purchase type | Proposed CGT treatment from 1 July 2027 | Negative gearing position | Likely market effect |
| Established investment property | 50% discount replaced by indexation rules for future gains | Limited for post-Budget acquisitions | More cautious investor demand |
| Shares and ETFs | 50% discount replaced by indexation rules | Not applicable in the property sense | Investors may reassess portfolios |
| Managed funds | Broadly affected by CGT reform | Not applicable in the property sense | Tax planning becomes more important |
| Commercial property | Broadly affected by CGT reform | Separate tax considerations apply | Some investors may compare returns |
| New residential builds | Choice between 50% discount or indexation model | Negative gearing continues | Stronger investor attraction |
| Main residence | Main residence exemption remains | Not an investment deduction issue | Homeowners largely unaffected |
This is where the concept of a “capital haven” emerges. The purpose of the reform is to encourage more investment into new housing supply. Treasury has stated that negative gearing will be limited to new builds from 1 July 2027, while properties acquired before Budget night will remain unaffected. The policy message is clear: if private capital wants maximum flexibility on property tax settings, it is being directed towards new housing.
These changes could see the new-build market become increasingly competitive. First-home buyers, downsizers and growing families may find themselves competing not only with other owner-occupiers, but also with investors shifting their focus away from shares, managed funds, cryptocurrency and commercial property. A newly built townhouse in Box Hill, an apartment in Norwest, or a house-and-land package in Marsden Park, Schofields or Riverstone may suddenly become more attractive to those seeking both capital growth and tax efficiency.
This presents a potential opportunity for developers and sellers. New builds are no longer just modern homes in growing communities; they may also offer advantages in a changing taxation environment. As a result, buyers are paying closer attention to completion dates, contract terms, depreciation schedules, zoning, sunset clauses and whether a property genuinely qualifies as a new residential build. The ATO has indicated that these changes are expected to commence from 1 July 2027, meaning purchasers should not rely on headlines alone and should await the final legislation.
This is where careful conveyancing becomes far more than a paperwork exercise. Off-the-plan purchases, duplex development sites, vacant land and newly constructed dwellings can all contain hidden risks if contracts are rushed. Before signing, buyers should review sunset clauses, developer extension rights, deposit protections, strata arrangements, easements and special conditions—not afterwards, when they are already committed to the transaction.
Flash Conveyancing Advice
Don’t buy a “new build” solely because of potential tax advantages. Review the contract terms, property status, settlement timeframe and legal risks before signing. A strong tax position is only valuable when it is supported by a secure title, a sound contract and a clear path to settlement.
Julian and Renee from Flash Conveyancing are specialists in property transactions throughout NSW. With extensive experience working with local councils including Blacktown, Hawkesbury, Blue Mountains, The Hills, Hornsby and Parramatta, they provide a personalised approach to every settlement across Acacia Gardens, Angus, Arndell Park, Blacktown, Colebee, Glendenning, Glenwood, Grantham Farm, Kellyville Ridge, Kings Langley, Marsden Park, Melonba, Oakhurst, Parklea, Quakers Hill, Riverstone, Schofields, Seven Hills, Stanhope Gardens, Tallawong, The Ponds, Baulkham Hills, Beaumont Hills, Bella Vista, Castle Hill, Kellyville, Kenthurst, North Rocks, Northmead, Rouse Hill, Vineyard, Windsor, Annangrove, Box Hill, Cattai, Dural, Gables, Galston, Glenhaven, Glenorie, Maraylya, Middle Dural, Nelson, North Kellyville, Norwest and Winston Hills.