(This article was first published in The West Australian, YourMoney, on 10 August 2026)
Confused about reforms to the capital gains tax treatment for property? Here’s how to play the Perth market if you’re still looking to invest
The Federal Government’s new tax rules for property have created plenty of confusion for investors. What changes, what are the implications, and where should you go from here?
Two experts — Nicholas Hart, a senior financial advisor at Empire Financial Group, and Matthew Hughes, a director of Capital Property Advisory — have all your questions answered.
The end of negative gearing as we knew it
The financial adviser’s perspective: The line in the sand was 7.30pm on May 12 this year.
Buy an established residential property after that moment and, from July 1, 2027, you can no longer offset any financial losses from holding the property against your salary.
Those losses don’t vanish, they get quarantined and carried forward, usable only against future rental income or the eventual capital gain. New builds keep full negative gearing. Importantly, anything held before Budget night is grandfathered.
Remember, the existing 50 per cent capital gains tax discount goes with it, replaced from July 1, 2027 by cost-base indexation and a 30 per cent minimum tax on the real gain, resulting in a higher rate of tax when the property is sold.
It’s worth being honest about who this actually affects.
The talk is about the ultra-wealthy but the reality is middle Australia — the teacher and the tradie looking to buy an investment property in Baldivis whose retirement plans just changed materially through no action of their own.
Understanding exactly which side of the May 12 line each of your assets sits on is now the first question in any property conversation.
The property expert’s perspective: Before Budget night, investor lending was running hot — up 18.8 per cent year-on-year to March. But the moment Treasurer Jim Chalmers sat down, the handbrake was pulled. Westpac’s investor loan applications plunged 20 per cent in three weeks.
On the ground in Perth, Real Estate Institute of WA data confirms inquiries have dropped and days on the market have doubled. The genuine investor market for established property has effectively frozen, outside of the self-managed superannuation fund rush, which will be short-lived.
It’s a sharp normalisation but frankly, it’s a necessary one. The frenzy had to end. Now, the market belongs to those who understand the new tax reality.
The buying opportunity for first-homebuyers and upgraders has not looked this good for some time in Perth, for those savvy enough to take the plunge during a period of uncertainty.
New builds versus established
The financial adviser: The policy intent is transparent: push investor money towards new supply. The practical effect is a two-tier market — established homes worth less to investors, and new builds carrying an artificial, tax-driven premium.
Investors need to be careful — a mediocre asset with a full tax deduction is still a mediocre asset.
For some investors, a quality established property with quarantined losses will still beat an overpriced new build with a full deduction. For others it won’t. The point is this is now a modelling exercise, not a rule of thumb.
The property expert: The Government wants investor capital funding new supply, but the reality in WA is vastly different. Finding quality completed product is very difficult and securing good vacant land is even harder.
If you do find land, it is typically pushed out to fringe areas where structural oversupply risks crippling your future capital growth potential.
Even if you secure a good block, do we actually have the construction workforce to build these homes? Investors are being pushed towards off-the-plan and new builds by tax incentives but you cannot let the tax tail wag the investment dog.
Location and product-type fundamentals still dictate performance. This has not changed.
The SMSF window and deadline
The financial adviser: Initially, super funds were left out of the CGT changes, and the negative gearing crackdown only affects individuals, trusts and partnerships.
A self-managed super fund is the only superannuation structure in Australia where you can hold an existing residential property, and the CGT changes made superannuation look even more attractive as a vehicle to hold residential property.
This is not because of the changes in gearing but because of the zero rate of tax in pension phase, meaning properties sold in retirement would pay no CGT.
However, the Government has since announced new limited recourse borrowing arrangements for residential property inside SMSFs will be banned from August 10, though existing arrangements are grandfathered, and commercial and business property LRBAs are completely untouched.
But, a word of caution: a legislative deadline is the worst possible reason to rush into a 30-year asset. If the strategy didn’t make sense in April, a closing window doesn’t make it sensible in August.
The property expert: An SMSF is now briefly the only structure where you can negatively gear an established property but the August 10 deadline for LRBAs is causing a dangerous rush.
I am seeing investors scramble to buy anything just to beat the clock.
You have to remember the sole purpose test — what makes a property suitable for super?
If you buy a compromised asset on the fringe just to secure a tax deduction, poor capital growth and weak yields will destroy your retirement balance, especially in Perth at this stage of its current market cycle.
Do not race to beat the deadline if it means buying the wrong asset.
Timing decisions in a normalising market
The financial adviser: Here’s what changes most about the sell-or-hold conversation — it’s no longer symmetrical.
A property held before Budget night carries grandfathered tax treatment that ends the moment you sell, and you can never buy it back.
If you sell an established investment property and then re-enter the market, you re-enter under the new rules — quarantined losses, no CGT discount, indexation, and the 30 per cent minimum tax.
That grandfathered tax treatment is now a part of the asset’s value, sitting invisibly alongside the property itself.
None of which means never sell. It means the decision deserves more thought than it did a year ago, and it certainly shouldn’t be made in a panic.
The CGT changes that start on July 1, 2027, add a timing dimension to any planned disposal as well. If you hold property in or out of super, get advice that models the alternatives properly — hold, sell, or restructure.
The cost of getting this wrong is permanent.
The property expert: Perth has delivered 23.9 per cent annual growth but momentum is slowing. Listings are rising, and three rate hikes have severely compressed borrowing capacity.
If you own a grandfathered property, understand that selling is a permanent, one-way door — you will never get that tax treatment back if you sell.
On a rare positive note though, the recent R-code subdivision changes have unlocked massive potential value for about 50,000 Perth homeowners.
Before you make any decision to sell or hold, you must understand your land’s development potential and how the recently announced impending changes might affect your home or investments.
Panic-selling a grandfathered asset without knowing its true highest and best use is a critical, and avoidable, mistake.
The bottom line
The financial adviser: My lesson for West Australians is the one I keep coming back to — don’t structure your investments around today’s rules as if they’re carved in granite, and don’t panic-react either.
In my experience, the people who do best out of constant policy change aren’t the ones who react fastest.
The property expert: The fundamentals underpinning Perth remain sound, but the era of buying any property in any location and making money is over.
This is a market that now strictly rewards careful strategy and asset selection, more than ever.
Whether you are navigating the new CGT rules, SMSF deadlines, or R-code changes, this is exactly where good independent advisers earn their value.
Nicholas Hart is a financial advisor at Empire Financial Group.
