2026 Tax Changes
the window to secure residential property in your smsf is closing
2026 has delivered the biggest reshape of property tax settings in a generation. Between the new superannuation rules, the reform of negative gearing and the overhaul of capital gains tax, the way Australians invest in property is changing – and changing fast.
Here’s the good news
For informed investors, the new rules point very clearly in one direction – brand-new property. And if you’ve been thinking about holding a residential investment property inside your Self-Managed Super Fund (SMSF), there is now a firm deadline: contracts generally need to be exchanged before approximately 10 August 2026. Let’s break it all down.
SMSF Borrowing for Residential Property Ends on 10 August 2026 – Secure Yours Now
On 23 June 2026, the Federal Government agreed to an amendment banning SMSFs from entering new Limited Recourse Borrowing Arrangements (LRBAs) for residential property. The legislation received Royal Assent on 26 June 2026 and commences 45 days later – around 10 August 2026.
The transition rules are generous for those who act
• Existing LRBAs are fully grandfathered – if your SMSF already holds a property with a loan, nothing changes.
• Exchange contracts before commencement and you’re protected – the legislation is explicit that arrangements entered into before the commencement date are grandfathered, even if settlement happens afterwards.
• Commercial (business real) property LRBAs remain available under the current rules.
In practical terms, this means the next few weeks are the final opportunity for Australians to secure a residential investment property in their SMSF using borrowed funds – potentially ever. Once the window closes, it closes for good, while those who exchanged in time keep their arrangements for the life of the loan.
The New Super Tax (Division 296) – Better Than Expected
The much-discussed Division 296 tax also commenced on 1 July 2026, and the final version is far friendlier than the original proposal. An additional 15% tax now applies only to the share of realised super earnings attributable to total balances above $3 million (with a further tier above $10 million). Importantly:
• No tax on unrealised gains – the controversial paper-profits tax was dropped.
• Thresholds are indexed – so they rise over time.
• Transitional relief is available – SMSFs can opt to exclude capital growth accrued before 1 July 2026.
The vast majority of SMSF members sit well below the $3 million threshold and are completely unaffected. Superannuation remains one of the most concessionally taxed environments in Australia – rental income taxed at just 15%, an effective 10% on capital gains held over 12 months, and potentially 0% tax in pension phase. More details can be found at the ATO and SuperGuide.
As part of the 2026–27 Federal Budget, the Government announced that from 1 July 2027, negative gearing will no longer be available on established residential properties purchased after 7:30pm on 12 May 2026. Rental losses on those properties will only be deductible against rental income or future capital gains – not against your salary.
The standout exception?
Eligible new builds. Investors in newly constructed housing – including house and land packages built on vacant land – can continue to negatively gear exactly as before, both now and after 1 July 2027. The Government has deliberately designed the rules to reward investors who add new housing supply. You can read the official detail on the Budget 2026–27 tax reform page and the ATO’s new legislation page.
Capital Gains Tax – New Builds Keep the Full 50% Discount
The same Budget replaced the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains, applying to gains accruing from 1 July 2027. Gains accrued before that date remain protected under the current rules.
Once again, eligible new builds are exempt – investors in new housing retain access to the full 50% CGT discount. Combined with the negative gearing exemption, the tax system now rewards new-build investors twice over.
Why Brand-New Property is Now the Clear Winner
Put the pieces together and the picture is compelling. Brand-new investment properties now offer:
• Negative gearing – retained exclusively for eligible new builds.
• The full 50% CGT discount – retained exclusively for eligible new builds.
• Maximum depreciation benefits – typically $9,000–$12,000 in first-year deductions on a new house (read our depreciation guide).
• Strong tailwinds – government policy is now actively channelling investor demand into new housing supply, supporting the new-build market for years to come.
At Prospa Property Advisory, brand-new, cashflow positive properties have always been our specialty – long before the tax system caught up. These changes simply confirm what our clients have known all along: new builds are the way to go, and that’s exactly what we do.
How Prospa Property Advisory Can Help
As Qualified Property Investment Advisors (QPIA), we help investors act decisively and safely. If you want to secure a residential property in your SMSF before the 10 August 2026 deadline, our team can work alongside your accountant and licensed financial adviser to source the right brand-new property and keep your timeline on track – remember, it’s the contract exchange date that matters, not settlement.
And if you’re investing outside super, we’ll show you how to take full advantage of the new-build exemptions for negative gearing and CGT, with quality house and land packages in high-growth locations.
The window is open – but only just. Contact Prospa Property Advisory today on 0499 115 395 to get started before 10 August 2026!
General information only. This article does not constitute financial, tax or legal advice. Superannuation and SMSF decisions should always be made in consultation with your accountant and a licensed financial adviser.
