The 2026 Federal Budget Unpacked

On the 12th May 2026, Federal Treasurer Jim Chalmers delivered the National Budget, outlining the Government’s financial priorities and economic plans through to mid-2027.[1]

The Budget includes several major changes that could affect first home buyers, property investors and business owners across Australia. While some measures aim to improve housing affordability and support small businesses, others could significantly change the way Australians invest in property.

Here’s a simpler breakdown of what the Federal Budget could mean for you.

What the Federal Budget Means for First Home Buyers.

First home buyers were a major focus of this year’s Budget, particularly younger Australians looking to enter the property market.

As part of the Government’s “Home Resilience and Reform” plan, several measures were introduced to improve housing affordability and increase housing supply.

Key changes include

• Providing $2 billion in infrastructure funding to support the construction of up to 65,000 homes by 2036.
• Banning foreign investors from purchasing established homes until mid-2029.
• Changing investor tax benefits such as negative gearing and Capital Gains Tax (CGT) concessions to help shift opportunities towards owner-occupiers.

According to the official Budget Overview:

“The Government is building on [Home Buying] efforts in this Budget by reforming negative gearing and capital gains tax concessions to help level the playing field for first home buyers and support more Australians to realise the dream of home ownership.” (Budget Overview 2026, p.24).[1]

The Government says these changes are designed to make home ownership more accessible for Australians. However, some the reforms could potentially place additional pressure on investors rather than directly solving broader housing supply challenges.

For first home buyers, these measures could potentially reduce competition in parts of the property market over time.

What the Federal Budget Means for Property Investors.

Property investors are likely to feel some of the biggest impacts from this year’s Budget.

Changes to Capital Gains Tax (CGT).

The Government plans to replace the current 50% CGT discount with a new indexation-based system from 2027.

Under the current rules, the maximum effective CGT rate for many investors is around 23.5%. Under the proposed changes, the minimum effective rate is expected to increase to around 30%.[2]

This could reduce after-tax returns for investors when selling investment properties. Superannuation funds, including SMSF will be excluded from CGT changes, keeping property invested in via an SMSF unaffected. [2]

These reforms will only apply to gains arising after 1 July 2027. Investors purchasing new builds will have a choice between  the existing 50 per cent CGT discount or the new arrangements.

Changes to Negative Gearing. 

The Budget also announced changes to negative gearing rules for established residential properties purchased after 12th May 2026.[3]

From 1st July 2027:

• Losses from eligible established residential investment properties will only be able to offset rental income or future capital gains.
• Investors will no longer be able to use those losses to reduce personal income tax on salary or wages.

Important Things to Know:

• New-build investment properties will still be eligible for negative gearing benefits. Knock down rebuilds will not count as new builds unless it adds a unit to the development[3].
• Existing investors who owned investment properties prior to 12th May 2026 will retain current arrangements under grandfathering provisions.[3]
• Commercial property will remain exempt from the negative gearing changes.[3]

These reforms could affect borrowing capacity, investment strategies and long-term returns for many Australians.

If you’re unsure how these changes may affect your financial position, now could be a good time to review your current strategy and explore your options.

What the Federal Budget Means for Business Owners.

There was positive news in the Budget for many small business owners.

The Government confirmed that the $20,000 Instant Asset Write-Off will become a permanent measure for eligible businesses with an annual turnover under $10 million.[4]

What This Means.

Eligible businesses can continue to immediately deduct the cost of qualifying business assets worth less than $20,000, including:

• Trade tools
• Office equipment
• Restaurant and café equipment
• Vehicles
• Technology and software

This could help businesses improve cash flow, invest in upgrades sooner and better plan for future growth.

With the end of the financial year approaching, business owners considering equipment or vehicle purchases may benefit from speaking with their broker early to understand their finance options and timing requirements.

Final Takeaways from this Year’s Budget. 

This year’s Federal Budget introduces significant changes across the property and business landscape.

For first home buyers, the Government hopes these reforms will improve access to housing over time. For business owners, the permanent Instant Asset Write-Off may provide greater certainty and flexibility.

However, investors may need to carefully reassess their strategies, as changes to CGT and negative gearing could alter the long-term outlook for residential property investment.

Whether you’re feeling cautious, optimistic or uncertain about these changes, speaking with a finance professional can help you better understand your options. Whether you’re looking to buy your first home, invest in property or grow your business, your local MoneyQuest broker can help you navigate a changing lending landscape and explore financial solutions that suit your needs.

[1] budget.gov.au (2026) Budget 2026: Resilience and reform. [online]. [Accessed 13th May]

[2]Bowes, M. (2026). Nine things from budget 2026 that investors need to know about CGT, property and super changes. [online] Australian Financial Review. Available at: https://www.afr.com/wealth/personal-finance/nine-ways-the-budget-just-changed-wealth-strategies-20260512-p5zw5z [Accessed 13 May 2026].

[3] budget.gov.au (2026) Negative Gearing and Capital Gains Tax Reform. 12/5/2026. [Accessed 13th May 2026]

[4]business.gov.au. (2026). What does the Budget mean for your business? [online] Available at: https://business.gov.au/news/budget-2026-27.[Accessed 13th of May]

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