So the budget dropped Tuesday night and I know a lot of us have fears and questions about what this means for our businesses and our clients.
I’ve been reading everything I can get my hands on and honestly, most of it is written for investors or first home buyers. Not much of it is written for us. The property managers managing those investors’ assets every single day.
So here’s my take. I’m not a financial planner, I’m not an accountant, and some of the detail is still being worked through as the draft legislation comes out. But based on what we know so far, here’s what I think it means for property management businesses specifically.
Please, please, please get your clients talking to their accountant. That’s the most important thing I can say. But here’s what I think we all need to understand first.
Negative Gearing vs CGT: They Are Not the Same Thing
This is the bit that’s getting muddled in a lot of the coverage, so I want to be clear because it actually matters for how you talk to your clients.
Negative gearing: your existing clients are protected.
From 1 July 2027, investors who buy established residential properties won’t be able to deduct rental losses against their salary or other income anymore. The losses don’t disappear. They get carried forward and can be offset against rental income or capital gains down the track. But they can’t be used to reduce a tax bill on wages.
Here’s the important part for us. The grandfathering line is 7:30pm AEST on 12 May 2026.Any property held or under contract before that moment keeps the old negative gearing rules. Fully. Permanently. Until they sell.
Every settled property in your current rent roll is covered. This is exactly the kind of thing you want to be proactively communicating to your clients right now, before they read a headline and start worrying. Be the source of truth. Their existing properties have not changed overnight.
New builds are also exempt from the changes entirely. Investors can still negatively gear new construction.
CGT is a different story, and this is where it gets more complex.
The CGT discount is not grandfathered in the same way. This is the bit most people aren’t talking about yet and I think it’s going to be the bigger conversation over the coming months.
Under the old rules, if you held an investment property for more than 12 months you only paid tax on 50% of the capital gain when you sold. The new rules replace that with a cost base indexation model. Your client only pays tax on the real gain, the part that actually grew above inflation. That sounds okay in theory. But there’s also a new minimum 30% tax rate on capital gains from July 2027, regardless of what income your client is on at the time of sale.
And the gain is split at 1 July 2027 for existing properties too.
Growth up to that date is still taxed under the old 50% discount rules. Growth after that date is taxed under the new model.
This applies to all residential investment properties, no matter when they were purchased.
There’s one more thing I didn’t see widely reported. Pre-1985 properties that have been completely CGT exempt since the tax was introduced will now be subject to CGT on gains that accrue after 1 July 2027. If you’ve got clients holding a family investment property for 40 years that has never attracted a cent of CGT, this is a completely new conversation for them.
Why Some Clients Might Want to Sell (And What That Means for You)
I want to be upfront here. We’re still working through exactly what all this means in practice and your clients absolutely need their own advice. And I am not an accountant or financial advisor so I’d recommend speaking to your partners. But based on what I understand so far, here are some scenarios that might come up.
The long-term holder who was planning to sell in a few years
Say your client bought in 2008 for $450k and the property is now worth $950k. They’ve been planning to sell when they retire. Under the old rules the whole $500k gain gets the 50% discount. Under the new rules, any growth after July 2027 loses that discount and has the minimum 30% rate applied instead.
If they were already thinking about selling in the next couple of years, the timing question just got more interesting. Selling before 1 July 2027 locks in the full discount on the whole gain. That’s a conversation for their accountant, but you might be the one who prompts them to have it.
The “sell in retirement” investor
A lot of investors have been planning to sell when their income drops in retirement so they pay less tax on the capital gain. That strategy relied on their marginal tax rate being low. The new 30% minimum rate on capital gains applies regardless of their income at the time of sale. So that plan looks different now for a lot of people.
The pre-1985 property
Your client’s family has owned an investment property since 1982. Never paid CGT. Never had to think about it. From 1 July 2027 onwards any new growth becomes taxable for the first time. Some of these clients are going to want to consider selling before that line is drawn. Accountant conversation, not ours to advise on. But we can absolutely flag it.
The investor running a loss on a recently purchased property
Their negative gearing is grandfathered so that part is fine. But the CGT treatment on future growth has changed. Some of them will run the numbers and decide the investment still works. Others won’t. You want to know which camp your clients are in before they make a decision.
I’m not saying everyone is going to sell. Most won’t. But I do think some clients will be prompted to review their plans, and it’s better that conversation happens with you involved than without you.
What I Think Property Managers Should Be Doing Right Now
Be the source of truth. Communicate proactively.
Your clients shouldn’t be finding out what this means from a news headline or a worried conversation at a dinner party. They should be hearing it from you, calmly and clearly, before they have a reason to worry.
That’s what great property managers do. They don’t wait for the phone to ring. They get ahead of it.
Send something this week. An email, a video, a voice note, whatever feels like you. It doesn’t need to be long. It just needs to show you’re across it and you’re thinking about them.
Something like: “Hey, I wanted to reach out about the budget changes because I know there’s a lot flying around and I didn’t want you to have any concerns without hearing from me first. The short version for your existing properties is that your negative gearing hasn’t changed at all. The CGT side is worth a conversation with your accountant if you’ve been thinking about longer-term plans. I’m happy to talk through what I know.”
Calm, informed, proactive. You’re not alarming them. You’re leading them.
And get your own advice too.
This goes for us as property management business owners as well. If you haven’t already spoken to your own accountant or financial advisor about what these changes mean for your business and any investments you hold personally, now is the time. We can’t be the source of truth for our clients if we haven’t done our own homework. The same partnerships you’re building for your clients, build them for yourself too.
Know your clients’ intentions going forward.
You don’t need to audit your existing rent roll. Every settled property is already grandfathered on negative gearing and there’s nothing to action there. What you do need to know is what your clients are planning to do next.
Who has been talking about selling in the next year or two? Who holds a pre-1985 property? Who has a trust structure that might be caught by the separate trust changes coming in 2028? Who has been thinking about buying another investment property and is now weighing up new build versus established?
If you don’t know the answers to those questions, a simple check-in call gets you that information and shows your clients you care. Both good things.
Build your expert network, for your clients and for yourself.
You need a financial planner who works with property investors and an accountant who’s already across the new rules. Not so you can give advice. So you can confidently say: “That’s beyond property management, but I know exactly who you should call.” And mean it.
If you don’t have those relationships yet, now is the time to build them. Even a simple introduction to a trusted advisor can be the most valuable thing you do for a client going through this.
And as I mentioned above, get your own advice too. Your clients need you to know your stuff. That starts with you doing exactly what you’re telling them to do.
Have a strategy when clients want to sell.
Some will. And when they do, don’t just let it go without a conversation.
First, is this a considered decision or a reaction to a headline? You’d be surprised how many people make big financial decisions based on what they read at 11pm on budget night. A calm conversation can sometimes be all it takes.
Second, if they are selling, can you keep it inside your world? Before it goes anywhere, look at your investor database. Do you have a landlord who’s been talking about adding to their portfolio? Selling to an existing investor client is the best outcome you can hope for. You keep the management, they already trust your agency, the property stays in your rent roll.
If it goes to an external agency, realistically the management goes with it. Which is exactly why the conversation needs to happen before they list, not after.
The Bigger Picture
Honestly, I think we’re all still figuring out what the next few years look like for the investment market. The detail in the legislation is still being worked through and there will be more clarity as that comes out.
What I do feel pretty confident about is this.
Fewer new investors will come into the established property market from mid-2027. That doesn’t mean the market stops. It means it changes. And in a market where the pool of active investors is smaller, the quality of your service and the strength of your client relationships matter more than they did before.
Investors who stay in the game are going to be more focused on yield, more selective about who they trust with their asset. That’s actually good news for great property managers. It’s harder news for average ones.
The businesses that will hold their rent roll through this period are the ones whose clients actually trust them. Who call them first. Who know their PM is across what’s happening and has their back.
That’s not about being a tax expert. It’s about showing up, staying calm, and being genuinely useful to the people who trust you with their investments.
Investors still need great property management. Right now, they probably need it more thanever.
Most of what I’ve written above is about your landlords and their properties. But here’s a question that came up in a conversation I had this week that I think a lot of business owners in this industry haven’t considered yet.
What about your rent roll?
I spoke to rent roll broker Matt Ciallella about this and it’s something worth understanding as CGT applies to rent roll sales. How that plays out for you specifically depends on how long you’ve held the roll, whether you’ve acquired along the way, and what rollover concessions are available on the proceeds. There are a lot of variables. What I do know is that this is not a set-and-forget situation and it’s worth a conversation with your advisors if you’ve been thinking about growth through acquisition, or if you’re somewhere in the back of your mind starting to think about an exit.
The bigger picture Matt raised is this. Smaller operators are going to feel a squeeze from both sides. If investors start exiting the market, rent rolls shrink. A shrinking roll is harder to keep profitable. Some business owners will look at that equation and decide the timing on a sale makes more sense now than in a few years.
That might be you. That might not be you. But it’s worth doing the maths either way.
If you’re working on building the kind of property management business where your clients come to you first, that’s exactly what we focus on inside PMBA. Find out more here.
FAQs
Is negative gearing grandfathered for existing investment properties?
Yes, fully. Any residential investment property held or under contract before 7:30pm AEST on 12 May 2026 keeps the existing negative gearing rules. Every settled property in your current rent roll is covered.
Is CGT grandfathered the same way as negative gearing?
No, and this is the important distinction. The CGT gain is split at 1 July 2027. Growth up to that date is still taxed under
the old 50% discount. Growth after that date is subject to cost base indexation and a minimum 30% tax rate. This applies to all residential investment properties regardless of when they were purchased and may prompt some long-term holders to think about their sale timing.
What should property managers tell their clients about the 2026 budget changes?
Lead with the reassurance on negative gearing. Existing properties are protected. Then flag that the CGT picture is more nuanced and worth a conversation with their accountant, particularly for anyone thinking about selling in the next few years. And reach out first rather than waiting to be asked.
Will property investors stop buying after the 2026 budget?
Not stop, but activity will likely slow for established properties. Investors will adjust, with more focus on new builds and positively geared strategies. Property managers with strong client relationships will hold their rent rolls through the change. Those without them will feel it.
What should a property manager do when a landlord wants to sell?
Have the conversation first. Is this a considered decision or a reaction to the headlines? If they’re selling, see if you can keep it inside your world by connecting them with an investor already in your database who might want to buy. If it goes to an external agency the management most likely goes with it, so getting in front of that conversation early is everything.
Still worried and want to chat? Or want a hand optimising your business into the future? We’re here to help
