What Property businesses should do before the rules change

The 2026 Federal Budget has set in motion the most significant shake-up of property taxation in a generation. From 1 July 2027, the 50 per cent CGT discount for future gains will give way to an inflation indexation model and a minimum 30 per cent tax rate, sitting alongside changes to negative gearing and a still-to-be-drafted overhaul of the taxation of trusts. For property investors, developers and family groups, the settings that have shaped decisions for decades are being redrawn.

What that means on the ground is far from uniform. The impact will land differently depending on where a client sits, what they hold and what they are planning next, and the right response is anything but one size fits all. Depending on your circumstances, the sensible course may be to model scenarios and act while flexibility remains, or to wait for the detail to be legislated, mindful of how far the recent changes have drifted from their original draft. What holds true across both is the need to understand your own exposure before making a move.

With that in mind, we put a single question to our property specialists around the country.

What is your view of the impact of the federal budget, and what is your general advice to your property clients on how to prepare?

“In the current environment, the greatest value is often created not by the property transaction but by ensuring the ownership structure, asset protection arrangements and tax outcomes are optimised before a triggering event occurs, as retrospective planning opportunities are becoming increasingly limited. Clients with acquisition, development or succession plans should be modelling different tax scenarios today so they retain flexibility and are not forced into costly restructures once changes become law. This also presents a great opportunity to improve structures already in place that were less than optimal to begin with. We find that new clients who come to us often have structures that were best practice 10 years ago but are not fit for today’s evolving environment.”

“As advisors, this budget represents the most significant change in tax legislation most of us have experienced. It has created significant levels of uncertainty, and I think the most important thing clients can do is be aware of the potential impact the changes may have. I would engage with your advisors early to get as clear an understanding as possible of what this could look like, as the impact for some may be more significant than the impact for others. From there, consider what planning opportunities may exist over the next few years to reduce these impacts and also consider any new ventures you are weighing up, as the approach you might have taken in the past may no longer be the best one.”

“Plan early! Despite what many people think, structuring, particularly for property acquisitions, has never been straightforward and the proposed changes have only added another layer of complexity. When I sit down with a client to structure a property transaction, there is no longer a simple checklist or a standard solution. Instead, we need to ask a whole host of questions, consider a range of possible future scenarios and consult the proverbial crystal ball as best we can. Structuring is not a one-size-fits-all exercise. It requires a thorough understanding of the client’s objectives, circumstances and long-term plans. While we await further detail on the proposed changes, and as the Government continues to make ‘adjustments’ to deal with unintended consequences as a result of rushing things through, the importance of planning early cannot be overstated.”

“I wouldn’t be doing anything until the changes are legislated and the rules are known. We saw that what was legislated with the recent Div 296 superannuation changes was significantly watered down compared to what was proposed or drafted, including the removal of the taxation on unrealised gains. Anyone who acted on this early, such as withdrawing assets from superannuation, may have ended up with assets in a higher tax environment than if they had just waited for the rules.”

“For property investors, my key advice is to start preparing now. The most important practical step will be obtaining a robust market valuation of investment properties as at 30 June 2027, as this valuation will effectively become a second cost base for calculating post-1 July 2027 capital gains. Having a defensible valuation on file will be critical in supporting future tax outcomes and reducing the risk of disputes with the ATO many years down the track.”

“While many of these measures are being promoted as initiatives designed to improve housing affordability and help younger Australians enter the property market, it is difficult to see them making a material difference for first-home buyers. What they are more likely to do is increase the cost of developing and holding property. Higher construction and compliance costs will ultimately flow through to purchasers, increasing the price of new housing stock. The changes will also alter the composition of the buyer pool for established residential properties by reducing investor participation, which may influence resale values and market liquidity. The measures may also discourage downsizing, as fewer investors in established homes could reduce buyer demand while pushing more downsizers towards new builds. That may make the transition less attractive for homeowners considering a move. More broadly, the changes could place further upward pressure on prices. Development projects reliant on pre-sales may take longer to get off the ground, potentially constraining future housing supply.“

Where this leaves property businesses

The common thread across every state is that the ground has shifted and the old certainties no longer apply. Where our advisers differ is on timing, and that tension is instructive. Acting too early carries the risk of committing to a position before the rules are settled, as the Division 296 experience showed. Waiting too long risks forfeiting the flexibility that makes good structuring possible in the first place.

For most property businesses, the sensible middle ground is preparation without premature action. That means understanding your own exposure, gathering the evidence you may later rely on, such as a defensible 30 June 2027 valuation and pressure-testing existing structures and future plans against a range of scenarios. The detail on changes to Trusts is still to come and further adjustments are likely, so the position will keep moving. Engaging your adviser early, and revisiting the plan as the legislation firms up, remains the most reliable way to stay ahead of it.

If you would like to discuss what these changes mean for your circumstances, please get in touch with your local William Buck advisor.