Property investment is one of the areas where good accounting advice makes a measurable difference. The decisions you make around structure, timing, and tax planning compound over the life of an investment, and getting them wrong is expensive to unwind.
Structuring Your Investment
How you hold a property has a direct bearing on how it is taxed, both while you own it and when you sell. Purchasing in your own name, through a trust, or via an SMSF each carries different tax treatment and different consequences down the line. We work through those options with clients before they commit, because restructuring later can trigger the very tax events you were trying to manage.
For clients considering an SMSF, the potential advantages are real. Rental income is taxed at 15%, and in the pension phase the fund may pay zero CGT on sale. The rules governing what you can hold and how are strict, and we make sure the structure is set up correctly from the outset.
Managing Your Deductions
Rental income is assessable, but there is a meaningful range of deductions available to offset it. Mortgage interest, property management fees, body corporate and strata costs, council rates, insurance, and maintenance are all claimable. Depreciation on the property’s structure and fixtures adds further over time, and we ensure a depreciation schedule is in place from the start so nothing is left on the table year to year.
Planning Around Capital Gains
When you sell matters almost as much as what you sell. Under the current rules, assets held for more than 12 months attract a 50% CGT discount, meaning only half the gain is assessable. We factor that into conversations about timing and whether to hold or sell, particularly for clients approaching retirement or a change in their financial position.
The 2026/27 federal budget proposes significant changes to CGT from 1 July 2027, replacing the 50% discount with cost base indexation and introducing a 30% minimum tax on net capital gains. For assets held before that date, the existing discount continues to apply to gains accrued up to 1 July 2027, but a split calculation will apply on eventual sale. We are already helping clients understand what that means for their specific holdings and what records and valuations they will need in place before that date.
A lot of people don’t realise they need to act before July 2027, not after. The valuation you get of your property as at that date becomes the starting point for every CGT calculation going forward. If you don’t have it, you’re guessing, and guessing costs you money.” — Shane Borg, Director
Negative Gearing
Where your annual property expenses exceed your rental income, the resulting loss can currently be offset against other assessable income, including wages. We factor this into annual tax planning for clients with investment properties, and it is often one of the more significant levers available in a given financial year.
The 2026/27 budget proposes to limit this from 1 July 2027. For established residential properties acquired after 12 May 2026, losses would no longer be deductible against non-rental income. However, they could still be carried forward and offset against future rental income or capital gains from residential property. Properties held before that date are not affected, and negative gearing would remain available in full for new residential builds.
It is important to note that these are proposed measures and are not yet law; we will touch on the legislative process further below.
Pre-1985 Assets
One of the less-discussed aspects of the proposed CGT changes is the treatment of assets acquired before 20 September 1985. These assets have sat entirely outside the CGT system since its introduction. Under the proposals, that exemption would be preserved only for gains accrued up to 1 July 2027. Gains arising after that date would become taxable.
This is the one that concerns me most for a lot of our clients. People who bought assets before 1985 have spent forty years assuming they’d never pay CGT on them. That assumption no longer holds after July 2027. If you’re in that position and you’re thinking about selling to fund your retirement, you need to understand what this actually means for your numbers before you make any decisions. — Shane Borg, Director
Keeping Across the Full Picture
Federal tax changes do not operate in isolation. In Victoria, state-level land tax changes in recent years have already affected properties that previously sat below the threshold. For our clients, we look at the federal and state picture together, because the compounding effect of both is what clients are actually navigating.
A Note on Proposed Measures
The changes described above are proposals from the 2026/27 federal budget, not current law. To become law, they must be introduced as a bill, pass both the House of Representatives and the Senate in identical form, and receive Royal Assent from the Governor-General. At the time of writing, June 2026, there is no full parliamentary agreement on these measures, and the final form of any legislation may differ from what was announced.
We expect greater clarity over the coming months as the legislative process progresses. We are monitoring developments closely and will update clients as details are confirmed.
