Capital Gains Tax and Negative Gearing – Tranche 2 Legislation

In the 2026–27 Budget, the government announced reforms to negative gearing and capital gains tax (CGT). The reforms aim to make the tax system fairer, support home ownership and help fund tax cuts for workers.

Parliament has passed the first stage of legislation and it is now law. We welcome your feedback on the next stage of draft legislation.

Feedback

We are seeking feedback on how the reforms should apply in specific situations, including:

• keeping current tax treatment when certain property transfers because of death or relationship breakdown

• defining a ‘new residential dwelling’, which lets owners offset net rental losses against other income and access the 50 per cent CGT discount

• exempting some affordable and social housing, NDIS housing, public housing and build-to-rent developments from the negative gearing changes

• keeping existing negative gearing and CGT treatment when first using an eligible main residence to produce assessable income

• excluding capital gains from certain trusts and deceased estates from the minimum tax on capital gains

• setting out how to calculate capital gains made before and after 1 July 2027

• further clarifying how the CGT changes apply to trusts, including attribution managed investment trusts (AMITs)

• ensuring the changes apply correctly to people who are Australian residents for only part of the time they own an asset

• ensuring certain CGT events do not trigger tax earlier than intended for deferred capital gains

Background

From 1 July 2027, the government will:

• limit negative gearing to new residential properties

• reintroduce capital gains tax cost base indexation

• introduce a 30 per cent minimum tax on real capital gains.

The government is introducing these reforms in stages. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 contains the second stage of the reforms.

You can find more detail in the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and Explanatory Memorandum, and the negative gearing and CGT reform tax explainer.