What the Budget Didn't Change
Three Opportunities Worth a Second Look After the 2026 Budget
The 2026–27 Federal Budget changes to negative gearing have dominated headlines, and understandably so. But headlines tend to flatten nuance, and the reality for established investors is more interesting than the top line story suggests.
If you already hold property, or you're sitting on equity in your home, there are three strategies that remain genuinely strong under the new rules. None of these are new ideas. What's changed is the relative attractiveness of each, and for many of our clients, that shift opens a window worth understanding.
As always, this article is general information, not financial or tax advice. The right move depends on your structure, your goals, and your numbers, and that's a conversation for your accountant or financial adviser. What we can do is help you see the property side of the equation clearly.
1. Buying property through your SMSF
Self-managed super funds have always offered a tax-advantaged way to hold property, and that hasn't changed in this budget. Rental income inside an SMSF is taxed at the concessional super rate, capital gains on assets held for the long term are taxed even more favourably, and once you're in pension phase, that tax can drop to zero.
What makes this worth a second look now is the contrast. As the new rules narrow the tax benefit of negatively geared property held in your own name, the relative appeal of holding an investment property inside the more concessional super environment increases. The fundamentals of SMSF property haven't moved. The comparison has.
This isn't a strategy for everyone. You need sufficient super balance to support the purchase (whether outright or via an SMSF loan), the right trust and compliance structure, and a long time horizon, since super isn't accessible until retirement. But for clients who tick those boxes, SMSF property purchase deserves a proper look this year.
2. Using established property to offset a positively geared portfolio
If you've been investing with us for a while, there's a good chance your portfolio has matured. Rents have grown, loans have been paid down, and properties that started out negatively geared are now throwing off positive cashflow. That's a great problem to have, and it also creates a tax problem: that extra income is taxed at your marginal rate.
Here's where it gets interesting. The new budget rules tighten negative gearing benefits primarily for new builds and new purchases going forward. Established property, the kind most of our clients already buy, still allows losses to be offset against other income in the way it always has.
That means if your existing portfolio has tipped into positive cashflow territory, adding a well-selected, negatively geared established property can bring your overall position back into balance. You're not chasing a tax break for its own sake. You're using a proven structure to manage the tax consequences of your own success, while adding a quality asset to your portfolio at the same time.
The skill here is selection. An established property that's negatively geared for the wrong reasons (poor location, weak fundamentals, an inflated purchase price) is just a loss. One that's negatively geared because of strong land value, a growth corridor, and a temporary gap between rent and holding costs is a different proposition entirely. This is exactly the kind of property we look for.
3. Converting your home to an investment and moving on
This one isn't about the budget directly, but it sits alongside these changes well, and it's a strategy we're increasingly raising with clients who've built significant equity in their family home.
If your current home would make a strong rental, whether because of its location, land size, or simply its long-term growth potential, converting it to an investment property while you upsize or downsize can unlock that equity for your next move. There are capital gains tax implications to understand here, particularly around how the main residence exemption applies once a property changes use, so this is a strategy that needs proper advice before you act.
But the property logic is straightforward. Your current home becomes a held asset, generating rental income and continuing to grow in value, while you move into a property that better suits where you are now, whether that's more space for a growing family or a more manageable footprint as the kids head off. Combined with the strategies above, a converted PPOR can also become the established, negatively geared property that helps balance a positively geared portfolio.
Where this leaves you
None of these three strategies are dependent on the parts of the budget that changed. If anything, the changes have sharpened the case for each of them, by making established property, super-held assets, and portfolio balance more relatively attractive than they were before.
What they have in common is that they all reward good property selection and timing. An SMSF purchase, a portfolio-balancing acquisition, or a PPOR conversion are only as good as the property underneath them.
If any of these sound like they could apply to your situation, we'd welcome the chance to talk it through. Get in touch and we can look at where you sit and what makes sense for your next move.
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