1. Negative Gearing Is Changing — But New Builds Are Protected
What changed?
From 1 July 2027, negative gearing on residential investment properties will be limited to newly built dwellings. This is one of the biggest shifts to property tax settings in Australia since the late 1990s.
If an investor buys an established (existing) residential property after 7:30pm AEST on 12 May 2026, any rental losses they make will no longer be deductible against their salary or wages. Instead, those losses will be ‘quarantined’ — meaning they can only be offset against other residential property income or carried forward to future years.
What stays the same?
Properties purchased before Budget night (including those already under contract) are fully grandfathered. Investors who already own established properties can keep negatively gearing them under the current rules until they sell.
New builds are exempt — full negative gearing continues to apply. This is the critical detail for NSW residential builders.
What counts as a ‘new build’?
The government has defined a new build as:
• Dwellings constructed on vacant land
• Off-the-plan purchases
• Knock-down rebuilds that add more dwellings to a site (i.e. increase supply)
Important: a simple renovation or a knock-down rebuild that doesn’t add a dwelling does not qualify. The property also can’t have been previously sold to anyone other than the original builder — and even then, only if it hasn’t been occupied for more than 12 months.
🔨 Builder’s take: If you’re building new homes — whether it’s a spec build, duplex, or small development — your buyers still get the full tax benefit. That’s a genuine selling point you should be using in your sales conversations. Investors chasing tax-effective new builds will be actively looking for licensed builders who can deliver. Make sure your marketing reflects this.
2. Capital Gains Tax Is Being Overhauled Too
The old rules
Under the existing system, if you held an asset for more than 12 months and sold it, you only paid tax on 50% of the capital gain. Simple, generous, and in place since 1999.
The new rules (from 1 July 2027)
The 50% CGT discount is being replaced with a cost base indexation method plus a minimum 30% tax rate on capital gains. In plain English: you won’t pay tax on the inflation component of your gain, but anything above inflation will be taxed at your marginal rate — with a floor of 30%.
These changes apply to individuals, partnerships, companies and most trusts. Superannuation funds are excluded.
What about new builds?
New build investors get a choice. They can apply either the new indexation method or the existing 50% CGT discount when they sell. That’s a deliberate incentive to push investor demand toward new housing supply.
There’s a catch though: the second buyer of a new build doesn’t get to claim it as a ‘new build’ again. The concession only applies to the original investor.
📊 What it means for investors: The CBA’s senior economist noted that established investment properties are expected to become less attractive from a tax perspective, with house price growth forecasts revised down slightly. Investors who would have bought existing stock may now redirect capital toward new builds. That’s a potential demand driver for residential builders who can deliver product.
3. A $2 Billion Local Infrastructure Fund — Unlocking Land for New Homes
One of the most practical budget measures for the residential construction sector is the new $2 billion Local Infrastructure Fund. This is money going to local governments and state utilities to fund the essential enabling infrastructure — roads, water, sewerage, power — that has to go in before a single home can be built.
The government says this is designed to support up to 65,000 new homes over the next decade. States and territories need to commit to pro-housing supply reforms to access the funding, including streamlining approvals and making more land available.
🏗️ Builder’s take: Approval delays and infrastructure lag are two of the biggest killers of project pipeline certainty. If this fund actually moves the needle on shovel-ready land supply in Western Sydney and other growth corridors, it’s genuinely good news for residential builders sitting on stalled projects or chasing new sites. Watch for announcements from NSW about how they’ll access this funding.
4. Free Access to Australian Standards — Finally
This one’s been a long time coming and deserves more attention than it’s getting. The budget commits to making all mandatory Australian Standards referenced in legislation free to access.
Right now, small builders and tradies have to pay to read the standards they’re legally required to comply with. The Housing Industry Association (HIA) has described this as a significant win, and the government estimates it will save small construction businesses up to $1,600 per year.
It also directly supports better application of the National Construction Code — which matters for licensing, compliance, and building defect disputes.
📚 For RTOs and training providers: this change has implications for how construction compliance is taught. When the standards are freely accessible, there’s no excuse for practitioners not to reference them directly. Training should reflect this.
5. Small Business Tax Wins
$20,000 Instant Asset Write-Off — Made Permanent
Small businesses with turnover under $10 million can now permanently deduct the full cost of eligible assets under $20,000 from 1 July 2026. No more year-by-year uncertainty about whether the scheme would be extended. If you’ve been holding off on buying a new piece of equipment, a trailer, or site tools because you weren’t sure about the write-off, that uncertainty is now gone.
Loss Carry-Back
From 2026–27, eligible companies that make a loss can apply it against tax paid in the prior two financial years and get a cash refund. For builders who had a tough year and paid tax the year before, this could be meaningful.
$1,000 Standard Work Deduction
From 1 July 2026, workers can claim a flat $1,000 deduction for work-related expenses without needing receipts. Not a game-changer for business owners, but handy for employees in your team.
6. What the Industry Bodies Are Saying
The Housing Industry Association (HIA) described the budget as ‘constructive on productivity and delivery, but conflicting on housing investment incentives’. They welcomed the free Australian Standards, the infrastructure funding, and the ongoing supply-side focus, but raised concerns about the negative gearing changes potentially reducing investor confidence in the short term.
Master Builders Australia endorsed the infrastructure funding and the permanent instant asset write-off, but their CEO Denita Wawn urged caution, noting ongoing pressures including a forecast shortfall of more than 200,000 homes against National Housing Accord targets, rising detached house building costs, and regulatory drag on new home prices.
BDO’s real estate and construction team put it bluntly: the policy direction is right, but market impact will depend less on the signal and more on execution. Planning delays, infrastructure gaps, construction costs and productivity constraints are still the real barriers.
🧑💼 Bottom line from the industry: the intent is good but delivery is the question. NSW builders should engage with their associations and monitor how these measures translate into on-the-ground changes to approvals, land supply, and investor demand over the next 12–24 months.
7. What Should NSW Builders Be Doing Right Now?
Here’s a practical checklist based on the budget announcements:
• Talk to your accountant before July 2027 — understand how the CGT and negative gearing changes affect any investment properties you personally hold
• Update your sales and marketing if you’re building new homes — investors will be looking for new builds specifically to retain tax concessions
• Review your asset purchases — the $20,000 instant write-off is now permanent, so plan equipment purchases around your taxable income
• Keep an eye on NSW infrastructure fund announcements — if approval-ready land opens up in your area, be ready to move
• Make sure you’re across the free Australian Standards change — start using them in your compliance processes and training records
• Check your CPD obligations — budgetary and regulatory change is a legitimate CPD topic under the NSW building framework, and understanding this budget counts
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