The Albanese Labor Government has successfully passed the first tranche of its highly anticipated and ambitious tax reform package through Parliament.
The legislation, which fundamentally alters the structural intersection between Australia’s tax system and the property market, will codify major adjustments to negative gearing, capital gains tax (CGT), and personal income tax.
Despite the real estate industry largely frustrated by the tax reform, Treasurer Jim Chalmers hailed the passage of the bill as a defining structural reset for the nation.
“Today is a really important day for economic reform, for tax reform, for our economy and our country and it’s a very good day for workers and first home buyers in particular,” he stated in a press release.
“The Bill that has passed today will help ensure aspiration and opportunity are the birthright of every Australian, not just some.”
For real estate principals, agents, property managers, and developers, this represents a significant shake-up to property investment dynamics.
Here is an industry breakdown of the legislative changes, the critical dates, and how they will shape the property market based on the passed legislation.
1. The negative gearing overhaul
The most profound shift for the real estate sector is the targeted restriction of negative gearing, designed to steer investor capital toward housing supply.
- The change: From 1 July 2027, future negative gearing will be restricted exclusively to new construction.
- Grandfathering protections: The legislation respects existing property portfolios, ensuring that those who already hold investments are not penalised.
“The Bill reforms future negative gearing so that it only applies to new builds from 1 July 2027, with generous grandfathering provisions for anyone who currently owns an investment property. This is all about encouraging investment in new housing supply while also respecting previous investment decisions people have made.”
2. Capital gains tax (CGT) restructuring
The legislation unwinds long-standing arrangements to return the capital gains tax system to its foundational purpose, though unique concessions have been built in to protect small businesses.
- The general shift: From 1 July 2027, the government is altering the CGT framework to address affordability.
- Small business relief: In an amendment for small business owners, including real estate agency principals, the government expanded access to tax relief by lifting the active asset turnover cap.
“The Bill that passed today included important amendments that we have previously flagged, including an increase to the eligible turnover threshold for the 50 per cent active asset CGT concession from $2 million to $10 million, so that all 2.7 million active small businesses and 98 per cent of all active businesses will be eligible for generous CGT concessions.”
3. Boosts for workers and first-home buyers
The package bundles property adjustments with sweeping personal tax relief, which will influence household budgets and borrowing capacities.
- The $1,000 instant tax deduction: Flagged ahead of the last federal election, this deduction for workers will come into effect early on 1 July 2026.
- Working Australians Tax Offset (WATO): Announced at the 2026-27 federal budget, this offset will provide up to $250 per year to eligible workers.
- Cumulative tax cuts: Mr Chalmers highlighted that the combination of these measures delivers substantial relief directly to the workforce:
“Today we have locked in two more rounds of income tax cuts for millions of Australians, a fair go for first home buyers, and a fairer tax system that better aligns the treatment of labour and asset income… We are now delivering five income tax cuts in three different ways, which will benefit the average worker by up to $2,816 a year from 2028.”
Timeline of key dates for real estate agencies
| Date | Measure | Impact on industry |
| 1 July 2026 | $1,000 instant tax deduction | Comes into effect for workers ahead of the broader package. |
| 1 July 2027 | Negative gearing restrictions | New rules apply; negative gearing is restricted to new builds with grandfathering for existing owners. |
| 1 July 2027 | CGT overhaul & $10M small biz cap | Capital gains tax is returned to its original intent; the $10 million active asset threshold begins. |
| 1 July 2027 | WATO implementation | Working Australians Tax Offset (up to $250/year) begins. |
With the core elements of the bill now locked in, the government is currently consulting on further CGT concessions.
Real estate professionals must now ensure they are accurately briefing investor clients on the 1 July 2027 grandfathering boundaries while preparing strategies tailored to the newly incentivised new-build sector.