If your phone, your feed, or your financial adviser has been full of noise about the 2026 Federal Budget, you’re not alone. A lot of what’s circulating is either incomplete, alarmist, or confusing. So I want to sit down with you… properly…. and walk through what has actually changed, what has absolutely not changed, and where the real opportunity sits right now.
‘The facts matter. But facts without context are just noise — and in property, noise costs people money.’
The change itself
What exactly is changing, and when does it take effect?
On 12 May 2026, the Federal Budget announced two significant shifts to property investment tax. First, negative gearing on established residential properties bought after Budget night will be restricted from 1 July 2027, losses can no longer be offset against your salary or wages, only against other rental income. Second, the 50% capital gains tax discount will be replaced from 1 July 2027 with an inflation-based indexation model, plus a minimum 30% tax floor on gains.
Here’s the critical detail most headlines skip: new builds, including off-the-plan apartments, are explicitly carved out of both changes. If you buy a newly constructed apartment, nothing changes. You keep full negative gearing, and you keep the choice of the 50% CGT discount or the new indexation model, whichever delivers the better outcome for you at time of sale.
Then, on 23 June 2026, the government confirmed an additional measure: new SMSF limited recourse borrowing arrangements for residential property will be banned, despite accounting for 1% of property borrowing. GO FIGURE. This will come into play approximately 45 days after the bill receives royal assent. Existing arrangements are fully grandfathered. I’ll cover what this means for SMSF investors further below.
In plain terms, what does this mean for an everyday buyer or investor?
If you own investment property already, nothing changes for you. Your negative gearing, your CGT position all grandfathered. Sit tight.
If you’re looking at established property as a new investment after Budget night, the tax treatment has shifted. You can still carry losses forward, but you can’t offset them against your salary from 1 July 2027 onwards. That changes the cash flow maths.
If you’re looking at a new build or off-the-plan apartment, the ground hasn’t moved at all. In fact, relative to established property, your tax position has just become considerably more attractive. The government has explicitly designed it this way, they want investment flowing into new housing supply, not competition for the existing pool.
‘The tax settings for new builds are the same as they were before the Budget. What changed is everything around them.’
Why does this create a window of opportunity right now?
Because investor demand is about to redirect. The budget has structurally disadvantaged established property for new investors while leaving new builds untouched. That means every investor who was weighing up an existing house versus a new apartment is now running a very different comparison and the numbers are tilting firmly toward new.
At the same time, Perth’s median house price has crossed $1 million. A household income of $191,000 is needed to keep repayments below the stress threshold at that price point. Apartments, particularly off-the-plan, are sitting $200,000–$400,000 below the house median, right in the range where genuine buying power still exists.
The house hold income angle
How does buying an apartment reduce the percentage of household income spent on the purchase?
Let me give you real numbers, and be straight with you about what they mean.
With Perth’s median house price crossing $1 million in 2026. At an 80% LVR with a 5.9% variable rate over 30 years, your monthly repayment is approximately $4,776, or roughly $57,300 per year. To stay below the 30% mortgage stress threshold, you need a household income of around $191,000. That’s not most households.
Now take an apartment at Boulevard in Cockburn, Solara in Inglewood, or Burswood Green in Burswood, entry points from $480,000, topping out around $650,000. At $580,000, roughly the midpoint, same LVR, same rate: monthly repayments sit around $2,750, or about $33,000 per year. The income needed to stay under the stress threshold drops to approximately $110,000. That’s two people working, earning around WA median wages. That’s real.
The gap between a median Perth house and a mid-range apartment in these projects is roughly $80,000 per year in required household income. That’s the difference between property ownership being within reach or completely out of it for a large portion of Perth buyers.
‘An apartment at $650K requires about $67,000 less annual household income than a median Perth house to stay below mortgage stress. That is not a marginal difference. That is a market segment.’
Who benefits most from this?
First-home buyers who’ve been priced out of the house market but have the income to comfortably service an apartment loan, especially with government schemes like Keystart (2% deposit, income limits to $218K for couples) and the First Home Guarantee still very much in play.
Mum and dad investors who want clean tax treatment, a new build depreciation schedule, and no renovation headache. With negative gearing still fully available on new apartments and a strong WA rental market sitting at 2% vacancy, the income case is straightforward.
Downsizers who’ve held the family home through Perth’s extraordinary price run and are now sitting on significant equity. They’re not using finance, they’re rightsizing into a premium product and freeing up capital.
And increasingly, seasoned investors are restructuring their portfolios. With the new CGT changes making established property more expensive to hold long-term, they’re looking at new builds as the cleaner position going forward.
What’s the common misconception you’d want to correct?
That apartments are a compromise. I hear it constantly: ‘I’d love a house, but I suppose an apartment could work.’ That framing needs to die.
In the right suburb, in the right building, with the right design, an off-the-plan apartment delivers a lifestyle and a financial outcome that a comparable house at $400,000+ more simply cannot match. You’re buying into a location you couldn’t otherwise afford, with a brand-new depreciation schedule, strata to take care of the building and maintenance, and right now, with the full protection of WA’s off-the-plan stamp duty concessions.
An apartment is not a downgrade. For the right buyer, it is the most intelligent move in this market.
The SMSF & commercial angle
For people unfamiliar: why is buying commercial property through an SMSF still advantageous, and what hasn’t changed?
The borrowing ban announced this week applies only to residential property LRBAs (limited recourse borrowing arrangements). Commercial property, shops, warehouses, offices, industrial units are completely unaffected. You can still borrow inside your SMSF to buy commercial property, and all of the tax advantages that made that strategy compelling are fully intact.
Here’s why it’s powerful: rental income inside an SMSF is taxed at 15%, compare that to your marginal tax rate, which for many professionals is 37–47%. Capital gains on assets held more than 12 months are taxed at an effective 10% in the accumulation phase. And once you move into the pension phase, past 60, that rate drops to zero. Every dollar of gain is tax-free.
The 2026 budget changes actually widened that gap. Outside super, the CGT treatment on established property is becoming materially more expensive. Inside super on commercial property, nothing changed. The SMSF commercial property strategy is now better relative to personal-name investing than it has ever been.
‘SMSF commercial property borrowing is completely untouched. And the gap between holding property in super versus personally has never been wider.’
What kind of investor should be looking at this strategy?
Business owners first. If you run a business and lease your premises commercially, you can sell that property into your SMSF and lease it back to yourself. Your SMSF collects the rent at 15% tax. When you retire, those assets sit in a zero-tax pension environment. It’s one of the most elegant structures in the Australian tax system, and it’s completely unchanged.
Professional investors with SMSF balances above $500,000 who want direct property exposure, predictable income, and long-term tax efficiency. And anyone for whom the negative gearing changes outside super have made personally-held established property less attractive the comparison now strongly favours the SMSF commercial structure.
What’s the most common question you get from clients about SMSF property?
‘Can I use my super to buy the apartment I’m planning to live in later?’ The answer is no, SMSF property cannot be occupied by a member or related party. The sole purpose test is strict. The residential SMSF strategy was always about investment, not personal use.
The second most common question right now: ‘Did the budget ban all SMSF property?’ Absolutely not. The ban is specific, prospective, and limited to new residential borrowing arrangements. Existing residential LRBAs are grandfathered. Commercial LRBAs are untouched. SMSFs holding property outright, without borrowing, are also unaffected. The structure is very much alive.
For buyers who need to hear this
How would you summarise the opportunity in one sentence?
Off-the-plan apartments are the only residential investment vehicle that sits outside every negative change the budget introduced, full negative gearing, CGT discount of your choice, and a stamp duty concession in WA, while Perth’s rental vacancy rate is sitting at 2% and units are outperforming houses on price growth for the first time in a generation.
What do you say to someone who is freaking out about the SMSF and investor announcements?
I hear you. The noise online right now is enormous, and some of it is genuinely alarming if you don’t have context. So let’s separate what actually happened from the fear.
What happened: negative gearing on established property is changing. SMSF residential borrowing is closing. The CGT discount is being restructured. Real changes and I won’t try to minimise them.
What did not happen: negative gearing on new builds, including off-the-plan apartments, was explicitly protected. SMSFs still work for commercial property, and for residential property held without borrowing. And critically, superannuation funds were carved out of the CGT changes entirely. If you hold property in super, your 10% effective CGT rate in the accumulation phase is untouched. In the pension phase, still zero.
So here’s the pivot: if you were planning to buy an established investment property in your personal name, rethink the vehicle and the asset type, not the strategy. Move into new builds where the tax advantages remain fully intact or move into an SMSF commercial structure where your long-term position is now comparatively stronger than it’s ever been.
The investors who win the next five years won’t be the ones who panicked. They’ll be the ones who understood exactly which assets the government just put a target on, and bought the ones they didn’t.
“The government just told investors exactly where to put their money. New builds. Every incentive still works. Most people are too busy reacting to notice.”
