Negative gearing changes explained: what the federal budget means for Brisbane property
If you have been watching the news lately, you could be forgiven for not knowing what to think.
Negative gearing changes. Capital gains tax overhaul. Housing affordability promises. A 30-minute budget speech that generated about three weeks of argument from every direction.
We spent the week after the budget reading everything, going to a costing lunch, and talking to accountants and brokers. Here is our honest read, without the political spin.
What the budget was actually trying to do
The whole purpose of the housing measures in this budget was to make it look like the government is solving the housing crisis. That is not necessarily a bad thing. But it is worth naming. Because the gap between the perception and the reality is where a lot of confusion lives right now.
Governments can change tax settings. They can change investor incentives and lending behaviour. What they cannot change quickly is how many good homes exist, how many families want them, or how long it takes to build a new one. None of that was addressed in 30 minutes.
The negative gearing changes
The headline change is this: you can still claim losses on your investment property, but you can no longer offset those losses against your personal income in the same year. The losses accumulate. You draw on them against future rental profits or against your capital gain when you sell. If the property never turns a profit and you sell at a loss overall, those accumulated losses still reduce your taxable gain.
In practice, this changes the cashflow timing more than the ultimate tax position. What it does change significantly is the strategy of buying a heavily negatively geared property purely to reduce your personal tax bill this year. That model gets a lot harder.
If you are buying an investment property and you cannot afford it without the negative gearing refund, that is probably not the right time to buy it.
The capital gains piece
The proposed change removes the 50 per cent capital gains discount and replaces it with a minimum effective tax rate on any gain. A grace period applies for assets held before the changes take effect.
Two things worth noting. First, nothing in the budget has actually been legislated yet. These are proposed changes, not law. Second, the trust piece is where the real complexity sits. People who bought investment properties through a trust structure, on good advice at the time, now face a different tax position to those who bought personally. They followed the rules as they were written. The rules changed underneath them. Some of those investors may sell before the grace period ends to access the full discount while they still can. That would add some supply at certain price points.
What it means for lending
Some lenders included negative gearing in their borrowing capacity calculations. Others never did. For lenders that did, there may be some recalibration. But the majority of lenders were already assessing borrowing on underlying financial fundamentals, not the tax refund. The headlines about lost pre-approvals are real for some borrowers at some lenders. They are not representative of most.
What it means for Brisbane specifically
Brisbane is not a spreadsheet market. It is not primarily driven by tax policy, investor sentiment, or budget speeches. It is driven by families wanting good homes in good school catchments, in a city that keeps growing and where construction is expensive and slow.
Good family homes in blue chip Brisbane suburbs — fully renovated, on a good street, flood free — will keep selling for good money. The buyer on the other side of that transaction is almost always an owner-occupier with a long horizon, not an investor chasing a tax outcome.
What might soften is the investor-heavy end. Speculative stock. Properties that were only moving because investors were piling in. That might flatten. From where we sit, that is not the worst outcome for the city.
Governments can change tax settings. They cannot change how many good homes exist, how many families want them, or how long it takes to build a new one.
The thing that will matter more than the budget
Interest rates. The rate environment will have more impact on Brisbane property confidence, activity, and pricing than anything in the budget speech. Right now, the direction of rates is still uncertain. One more rise is possible. Two is possible. A pause is also possible.
Watch the trimmed inflation measure more than the headline number. That is what the RBA is actually looking at.
The most likely outcome for the Brisbane market: slower growth, more negotiation, and a more stable environment than recent years. The budget changes the tax calculus for some investors. It does not change the fundamental supply and demand picture that has been driving Brisbane prices for three years.
Good luck out there.
