Futurerent CEO Godfrey Dinh says the Federal Budget’s changes to negative gearing and capital gains tax may improve affordability over time, but could also create unintended pressure on rental supply, investor behaviour and property cash flow.
SYDNEY, AUSTRALIA — The Federal Government’s latest Budget has put property investors back at the centre of Australia’s housing debate.
From 1 July 2027, the Government will limit negative gearing for residential property investments to new builds. It will also replace the 50 per cent Capital Gains Tax discount with cost base indexation and introduce a 30 per cent minimum tax on capital gains. Existing arrangements will remain unchanged for properties held before Budget night, while investors who buy established homes after Budget night will face different tax treatment from 1 July 2027.
Futurerent CEO and founder Godfrey Dinh says the policy is clearly designed to support first-home buyers and encourage investment into new housing supply. However, he warns that the changes could also create a more complex market for investors, particularly those buying established properties.
“The intent is understandable,” says Dinh. “Housing affordability is a real issue, and the Government is trying to shift investor behaviour towards new supply. But the risk is that we create a two-speed market where existing landlords keep their current settings, while new investors face a very different cash-flow equation.”
The reforms arrive at a time when housing is already playing a major role in Australia’s inflation story. According to the latest ABS data, annual CPI rose 4.6 per cent in the year to March 2026, with Housing up 6.5 per cent and the largest contributor to annual inflation.
For Dinh, that is where the policy becomes more complicated.
“When housing costs are already one of the biggest drivers of inflation, any policy that changes the economics of providing rental housing needs to be watched closely,” he says. “The question is not just whether investor demand cools. It’s whether these changes affect rental supply, investor confidence and the cash-flow decisions landlords make.”
A two-speed market between existing landlords and new investors
One of the most important features of the Budget is the decision to preserve existing arrangements for properties held before Budget night.
That means many existing landlords will keep their current negative gearing treatment. New investors buying established residential property after Budget night will not have the same treatment from 1 July 2027. Instead, rental losses will generally only be deductible against residential property income, with excess losses carried forward to future years.
Dinh says this creates a clear divide.
“Existing landlords may have a stronger reason to hold onto their properties because their tax position is now more valuable relative to new entrants,” he says. “At the same time, new investors buying established homes will need to reassess the numbers more carefully, especially if the property is negatively geared.”
This does not mean investors will exit the market overnight. But it may change how they assess risk, cash flow and timing.
For some investors, the changes could make new builds more attractive. For others, particularly those focused on established properties in high-demand suburbs, the after-tax cash-flow picture may become harder to justify.
“The policy may help first-home buyers at the margin,” says Dinh. “But if it also discourages some investors from entering the rental market, the rental supply impact needs to be taken seriously.”
The “inflationary loop” risk
Dinh says the biggest risk is not that the Budget directly causes rent increases. Rental markets are shaped by many factors, including wages, vacancy rates, migration, construction costs, borrowing conditions and tenant affordability.
The risk is more subtle.
If new investors face higher after-tax holding costs on established properties, some may decide not to buy. Others may require stronger rental yields before they enter the market. In tight rental markets, that could add pressure to rent expectations over time.
“This is the inflationary loop risk,” says Dinh. “Housing costs are already pushing inflation higher. If policy settings make it harder or less attractive to provide rental housing, that could add further pressure to rental markets. And if rents keep rising, that feeds back into inflation data.”
He says the Reserve Bank will be watching housing costs closely because persistent housing inflation can make it harder to bring headline inflation back towards target.
“The Government is trying to improve affordability, but the timing matters,” says Dinh. “When CPI is elevated and housing is a major contributor, policymakers need to be careful that reforms do not unintentionally add pressure to the very part of the economy they are trying to fix.”
CGT indexation may create different outcomes depending on inflation
The Budget also changes the treatment of capital gains.
The current 50% CGT discount will be replaced by cost base indexation, with a 30 per cent minimum tax on capital gains from 1 July 2027. Under indexation, investors pay tax on their real capital gain rather than the full nominal gain. The Government says this restores the original intent of the CGT system.
Dinh says the practical impact will depend heavily on the investor’s marginal tax rate, the inflation rate, the holding period and the asset’s capital growth.
“This is where investors need to be careful,” he says. “It is too simplistic to say the new CGT rules are automatically better or worse. The outcome depends on the numbers.”
In periods of higher inflation, indexation can become more valuable because a larger portion of the nominal gain may be treated as inflation rather than real gain. In periods of low inflation and strong capital growth, the outcome may look quite different.
“The move to indexation makes the tax outcome more sensitive to inflation,” says Dinh. “That means investors will need to think more carefully about holding periods, expected growth, inflation assumptions and their personal tax position.”
Dinh says this is one area where investors should get professional tax advice rather than relying on headlines.
“The danger is that investors hear ‘CGT discount removed’ and assume the outcome is obvious,” he says. “It isn’t. Indexation changes the calculation, and the result may vary significantly from one investor to another.”
Rental supply remains the key question
The Budget aims to redirect investor demand towards new housing. In theory, that could support construction and add to long-term supply.
But Dinh says the transition will matter.
“New supply does not appear overnight,” he says. “If investors pull back from established properties faster than new housing comes online, there could be short-term disruption in rental markets.”
This is particularly relevant in capital cities where vacancy rates remain tight and tenants already face limited choice.
Dinh says the Government’s intention may be sound, but the market response needs to be measured over time.
“The key question is whether these reforms genuinely shift capital into new builds, or whether they simply make some investors step back altogether,” he says. “If the result is more new housing, that is positive. If the result is fewer rental investors and no immediate lift in supply, renters may feel the pressure.”
Cash flow will become more important for investors
For property investors, the Budget reinforces one point: cash flow matters.
Investors can no longer assume that the tax settings they have relied on in the past will apply to future purchases. They will need to assess each property on its own merits, with more attention on rental yield, holding costs, buffers and funding flexibility.
Dinh says this is where many investors will need to adjust their thinking.
“In a changing tax environment, investors need to be more deliberate,” he says. “The right property may still make sense, but the cash-flow buffer becomes more important. Investors need to understand how the property performs before tax, after tax and under different interest rate scenarios.”
That does not mean investors should panic. It means they should run the numbers properly.
“Good investors are not just chasing tax benefits,” says Dinh. “They are looking at the full picture: location, rental demand, capital growth potential, debt structure, cash flow and flexibility.”
What investors should consider next
Dinh says investors should avoid making rushed decisions based only on the Budget headlines.
Instead, they should consider:
- whether they already hold properties that are grandfathered under the existing rules
- whether future purchases are likely to be established properties or new builds
- how the loss quarantining rules may affect after-tax cash flow
- whether indexation changes the expected CGT outcome for their situation
- how much cash buffer they need to hold through changing market conditions
- whether refinancing, selling or accessing equity still makes sense under their broader strategy
“The investors who navigate this best will be the ones who stay calm and focus on the numbers,” says Dinh. “This is not about defending tax concessions. It is about understanding how policy changes flow through to supply, rent expectations and investor behaviour.”
A policy aimed at affordability needs to avoid weakening rental supply
Dinh says the Budget should be judged not only by its intent, but by its impact.
“Everyone wants a healthier housing market,” he says. “More first-home buyers, more supply, better affordability and a more balanced system. The challenge is getting there without reducing rental supply or creating unnecessary pressure on tenants.”
He says the reforms may ultimately encourage more capital into new housing, but that outcome is not guaranteed.
“The policy direction is clear: the Government wants investors to fund new supply rather than compete with first-home buyers for established homes,” says Dinh. “The risk is that some investors may not move from established homes to new builds. They may simply pause, reduce exposure or demand higher returns before entering the market.”
For renters, that distinction matters.
“If fewer investors buy established rental properties and new supply takes time to arrive, rental markets could stay tight,” says Dinh. “That is why the implementation needs to be watched closely.”
Godfrey Dinh available for comment
Godfrey Dinh, CEO and founder of Futurerent, is available to comment on:
- how the Budget may affect property investor behaviour
- why the reforms could create a two-speed market between existing landlords and new investors
- how negative gearing changes may affect investor cash flow
- why CGT indexation may produce different outcomes depending on inflation and holding period
- what investors should consider before buying established property under the new rules
- how policy changes could influence rental supply and affordability over time
General information only. This commentary does not constitute tax, legal or financial advice. Property investors should seek professional advice based on their individual circumstances.
About Futurerent
Futurerent is an Australian fintech helping property investors access equity from their investment properties without refinancing or selling. Investors can cash out up to $100,000 per property, with funds available in 2 business days, and the cash out is settled from a fixed portion of rental income over time. Futurerent’s role is to help property investors move forward with more flexibility, without the usual refinancing roadblocks.
