What’s in the budget 2026–27?

The federal budget for 2026-2027 has been handed down by federal Treasurer Jim Chalmers MP on Tuesday evening (12 May 2026), with a sweeping tax reform package and new initiatives affecting brokers, homeowners, and small and medium-sized businesses (SMEs).

Broker Daily has unpacked the most relevant changes to the industry.

Here’s what the Budget 2026–27 has in store for the housing and mortgage industry:

Housing Tax Reform

In a major policy shift aimed at addressing intergenerational equity, Treasurer Jim Chalmers has announced reforms to the tax system to prioritize young home buyers over speculative investors.

Negative Gearing and CGT Overhaul

• Negative Gearing Restriction: Effective 1 July 2027, negative gearing will be restricted to newly built properties only. Investors will no longer be able to offset losses from established investment properties against taxable personal income.

From 1 July 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and able to be offset against residential property income in future years.

These changes will apply to established residential properties acquired from 7:30PM (AEST) on 12 May 2026. Properties acquired prior to this time (including contracts entered into but not yet settled) will be exempt from the changes until disposed of.

Eligible new builds will be exempt from the changes, ensuring the benefits of negative gearing are directed to investment that increases the housing stock. Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing programs.

• Capital Gains Tax (CGT) Changes: The government is moving away from the blanket 50 per cent CGT discount. Instead, it is moving back to an indexation model, where only gains above inflation are taxed

From 1 July 2027, the 50 per cent CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains.

These changes will apply to all CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships.

Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains arising on or after 1 July 2027. The 50 per cent CGT discount will continue to apply to gains arising before 1 July 2027. Capital gains on pre-1985 assets arising before 1 July 2027 will remain exempt from CGT.

To maintain incentives for new housing supply, investors in new residential properties will be able to choose either the 50 per cent CGT discount, or cost base indexation and the minimum tax. Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.

'Better aligning the taxes paid on these types of income with the taxes paid on wages'

Chalmers commented: "We’re delivering a fairer tax system for workers, first home buyers and future generations.

"This will help rebalance a system which is more generous to assets than it is to labour. And help rebalance a system where house prices have decoupled from incomes.

"Since 1999, house prices have risen over 400 percent, more than twice as fast as average incomes. Our tax changes will help about 75,000 Australians achieve the dream of home ownership."

He said: "We’ll limit negative gearing for residential property to new builds from July next year. And we’re replacing the 50 per cent capital gains tax discount with inflation‑adjusted indexation, to restore the taxation of real gains.

"These changes will be prospective, and new builds will retain the option to use the 50 per cent discount.

"We’ll also introduce a minimum 30 per cent tax rate on capital gains from July next year, and on discretionary trusts from July the year after."

The Treasurer said: "This is about better aligning the taxes paid on these types of income with the taxes paid on wages.

"These changes will level the playing field for workers and first home buyers, and support investment in productive assets, including new housing supply.

"And they will fund our new round of tax relief for more than 13 million Australian workers."

The budget continues to run existing home-buying measures in tandem with the new tax reforms:

• 5% Deposit Schemes: These home guarantee scheme initiatives continue to "turbocharge" demand among first-home buyers, particularly in affordable price brackets.
• Help to Buy Scheme: The controversial shared equity scheme will come into maturity. The scheme aims to helps first home buyers enter the market sooner by reducing the upfront cost of purchasing a property. Instead, borrowers can co-purchase a property with the federal government. Under the scheme, the government contributes up to 40 per cent for new homes and 30 per cent for existing properties for eligible owner-occupiers.
• Extending the ban on foreign investors buying existing homes until mid‑2029, meaning Australians will be able to buy homes that would have otherwise been bought by foreign investors. Current limited exceptions to the ban for purchases of established dwellings that support housing supply will continue.

'This is about one goal: More Australians in a home'

Chalmers said: "This is about one goal: More Australians in a home – whether they own or rent.

"We’re backing this plan with serious investment, lifting our total housing commitment to a record of over $47 billion.

"This is the largest and most comprehensive housing plan Australia has seen in generations."

He said: "This is about building more homes, helping more Australians realise the dream of homeownership and giving younger Australians a leg up in the housing market.

"We know it’s too hard for too many Australians to buy their own home and get ahead.

"That’s why we’re investing in building more homes, making our tax system fairer and putting first home buyers ahead of foreign investors.

"Reforms in this Budget to make the tax system fairer will help 75,000 homeowners into the housing market over the next decade.

"We’re coming at this housing challenge from every responsible angle, and this Budget builds on our ambitious housing agenda.

"Our housing plan is pro‑aspiration and it’s pro‑investment."

Supply and Construction

The government is introducing new measures to accelerate construction and reach its ambitious target of building 1.2 million homes by 2029.

Infrastructure Fund: An additional $2 billion has been allocated to support the connection of sewerage, water, and electricity infrastructure. Treasury estimates this could unlock up to 65,000 new homes.

Community housing A $59.4 million investment will supplement rental income for community housing providers to support over 4,000 young people at risk of homelessness. Additionally, $6.3 million is allocated to establish a national First Nations housing peak body to improve sector outcomes.

Support for SMEs

The 2026–27 budget provides long-term certainty for small businesses, through a range of support initiatives, including:

Permanent $20,000 Instant Asset Write-Off: Small businesses with an annual turnover under $10 million can now have assurance they can deduct the full cost of eligible assets up to $20,000, after the instant asset write-off was made permanent. This ends the cycle of year-to-year extensions that previously left businesses in limbo. This change will deliver around $890 million in cash flow support over the next five years. According to the governemnt, this will slash compliance costs for small businesses by around $32 million a year and save them 366,000 hours on record keeping.

Delivering a permanent two‑year loss carry back for companies with turnover of up to $1 billion from 1 July 2026, so that small businesses can "return to profitability faster, and have the confidence to invest earlier and withstand volatility".

Introducing loss refundability to help start‑ups grow in their first two years.

Expanding tax incentives for venture capital to help unlock more investment in young and expanding businesses.

Ensuring around 1.5 million sole traders benefit from a $250 tax offset from 2027–28, as part of the Treasurer's plan to reduce the tax burden on working Australians.

Providing expanded rollover relief from income tax consequences, including capital gains tax, for small businesses currently operating through a discretionary trust to transition to another small business structure.

A new tax cut will also be implemented for every working Australian. Starting in mid-2027, the $250 Working Australians Tax Offset joins a suite of five tax reforms—including a $1,000 instant deduction and consecutive rate cuts—to provide the average worker with up to $2,816 in annual savings and a cumulative tax reduction of nearly $39,000 over the next decade.

More to come.

[Related: Broking industry applauds move to make IAWO permanent]

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