This is no longer a proposal. The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed the Australian Senate on 25 June 2026 and became law the following day. For property investors on the Sunshine Coast - and across Australia - the rules have fundamentally changed.
Note: This post is for general information only and is not financial or tax advice. Please speak with your accountant or financial adviser about your specific situation.
What changed - and when
The key cutoff date is 7:30pm AEST, 12 May 2026 - the moment the Federal Budget was handed down. Everything turns on whether you owned or were under contract before that moment.
Budget announced. Cutoff date for grandfathering. Properties held or under contract at this moment are protected under the old rules indefinitely.
Bill passed the Senate after amendments negotiated with the Greens.
Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 enacted into law.
Restrictions take effect. From this date, losses on established properties purchased after 12 May 2026 cannot be offset against salary or personal income.
The key rule changes
For established residential properties purchased after 7:30pm AEST on 12 May 2026:
- Rental losses offset against salary and personal income
- 50% capital gains tax discount for assets held 12+ months
- Applied to all residential properties
- Losses can only offset other rental income or future capital gains
- Losses carried forward indefinitely - not lost, just deferred
- CGT discount replaced with cost base indexation
- Minimum 30% tax rate on net capital gains held 12+ months
New builds remain fully exempt. Eligible new builds can still access negative gearing against personal income and the 50% CGT discount. This exemption applies to the first investor purchaser only.
The scale of what's changing
To understand why this matters, it helps to know how widely negative gearing has been used. According to ATO data for 2022-23:
Source: Australian Taxation Office — Tax reform: Boosting home ownership. ATO rental property data 2022-23.
Who is affected?
Nearly 70% of negatively geared investors have taxable income below $80,000, however 60% of the tax benefits flow to the top 20% of income earners, and 80% of CGT discount benefits go to the top 10%. This distributional imbalance is what drove the reform.
Source: Budget 2026-27 Tax Reform, Treasury analysis.
What does this mean for Sunshine Coast landlords?
Your position depends on when you bought, and what you plan to do next.
If you bought before 7:30pm on 12 May 2026
You're fully protected. Your existing properties can continue to be negatively geared against personal income indefinitely under the old rules. Nothing changes for you on these properties. This grandfathering is permanent - it's written into the legislation.
If you bought after 12 May 2026 (or are considering buying)
Losses on your established property investment can no longer offset your salary or personal income from 1 July 2027. Your losses aren't lost - they're carried forward and can offset future rental income or capital gains when you sell - but the immediate tax benefit that many investors relied on is gone.
The practical question to ask your accountant: does the property still make sense on its own fundamentals, without the negative gearing tax offset? For well-priced properties in high-demand rental markets like the Sunshine Coast hinterland, the answer for many investors will still be yes.
The CGT change matters too
From 1 July 2027, the 50% capital gains tax discount on established properties will be replaced with cost base indexation (adjusting your purchase price for inflation). Combined with a minimum 30% tax rate on net capital gains, this increases the effective tax on investment property gains considerably for properties purchased after the cutoff.
What about rental supply?
One effect of restricting negative gearing that's well-documented in economic literature: it tends to reduce private rental supply. If investors exit the market or decide not to enter it, those properties either convert to owner-occupier housing or sit vacant. For renters, this typically means tighter supply and upward pressure on rents.
For well-managed properties in high-demand areas like the Sunshine Coast hinterland, this dynamic reinforces the value of holding - particularly for grandfathered investors who are now operating under more favourable terms than anyone who buys after them.
What we'd recommend
Regardless of your position under the new rules, the fundamentals of good property investment haven't changed:
- Talk to your accountant about your specific tax position under the new rules - urgently if you've bought after 12 May 2026
- Know your current rental yield and whether it's at market rate
- Minimise vacancy through good tenant selection and management
- Keep the property maintained so it attracts and retains quality long-term tenants
At R&C Property Group, we can't advise on tax. But we can make sure your property is managed in a way that maximises rental income and minimises costs - which matters more than ever when the tax equation has changed.
References: ATO - Tax reform: Boosting home ownership · Budget 2026-27 Tax Reform · Parliament of Australia - Treasury Laws Amendment Bill 2026