22 May 2026

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Last Thursday night, Opposition Leader Angus Taylor used his budget reply to commit the Coalition to repealing Labor's negative gearing and capital gains tax changes if they win the next election. For property investors who spent the last week wrapping their heads around what the budget actually meant, this adds a second question to the mix: what if it gets reversed before it starts?

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We've had a few of these conversations with clients this week, and the honest answer is that this complicates things in a specific way without changing the underlying advice much. Here's how to think about it.

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What Was Actually Pledged

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In the budget reply on Thursday 15 May, the Coalition committed to repealing both of the major property tax measures: the restriction of negative gearing to new builds only (effective 1 July 2027 for purchases made after 12 May 2026), and the replacement of the 50% CGT discount with cost base indexation and a 30% minimum tax rate (also effective 1 July 2027).

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That's a clear election commitment. What it isn't is a guarantee. For the repeal to happen, the Coalition would need to win the next federal election, which is currently scheduled for around mid-2028 (within a few months of the negative gearing changes taking effect). They would then need the numbers in both houses to pass legislation reversing the changes.

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So the question isn't whether the changes might be reversed. The question is what probability you'd put on that sequence of events, and how that probability should affect a decision you're making right now.

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The Three Time Periods That Matter

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For an investor trying to think clearly about this, it helps to break the timeline into three distinct windows.

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Now until 30 June 2027. Nothing has changed yet. Negative gearing on established property purchased after 12 May 2026 is still available during this window. The 50% CGT discount still applies to all capital gains accrued during this period. The new rules don't start.

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From 1 July 2027. Assuming current legislation passes parliament (which still has to happen), the new rules kick in. Negative gearing restricted to new builds. CGT calculated under indexation with the 30% minimum tax. This is the window where the new rules actually bite.

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From mid-2028 onwards. The next federal election sits roughly here. If the Coalition wins and follows through on the pledge to repeal, the new rules potentially reverse. If Labor wins, the rules stay. If the Coalition wins but loses or compromises in the Senate, partial reversal or no reversal is possible.

That three-window picture is the framework worth holding in your head. Each window has different rules, and the further out you go, the more uncertain those rules become.

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What This Means for Decisions You're Making Now

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The temptation when a major policy change gets a pledged reversal is to assume it won't actually take effect and carry on as if nothing happened. That's risky for a few reasons.

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The first is that the new rules will take effect for at least a period. Even if the Coalition wins in mid-2028 and immediately legislates a repeal, the rules will have been live for around 12 months. An established property purchased in late 2026 will have lost negative gearing access from 1 July 2027, and any capital gains accrued from that date will have been taxed under the new rules during that period. Repeal doesn't undo the time the rules were in force.

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The second is that election outcomes aren't predictable two-and-a-half years out. The current polling, the current leader, the current set of issues, all of it shifts. Making a multi-decade property investment decision on the assumption of a specific election outcome two years away is a stretch.

The third is that even if the rules are repealed, the announcement effect has already happened. Pricing in the established investor market has already adjusted to reflect the new rules. A repeal doesn't necessarily restore the market dynamic that existed before the announcement, because investor behaviour and supply patterns will have shifted in response.

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The practical implication is that decisions you make now should largely assume the budget rules will take effect as legislated, with reversal as an upside scenario rather than a base case.

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What Does Actually Shift

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A few things genuinely do change with the Coalition's pledge on the table.

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If you're an investor who was planning to sell an existing property before 1 July 2027 specifically to crystallise capital gains under the 50% discount, the case for that strategy weakens slightly. Holding past 1 July 2027 means accepting the new CGT treatment, but if there's a meaningful chance of reversal by 2028, the cost of waiting is less certain than it looked a week ago.

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If you're weighing a new build purchase that only really stacks up on the tax advantages (negative gearing access plus CGT optionality), the strategic edge of new build over established narrows if there's a chance both are eventually taxed the same way. The new build still has the certain advantage between mid-2027 and any potential 2028 reversal, but the long-tail tax advantage isn't guaranteed.

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If you're a trust-structured investor planning around the 30% minimum tax on trust income (which starts 1 July 2028), the same applies. The trust measure was always a longer-burn change and the political risk to it is real.

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In none of these cases does the answer flip from "do this" to "do the opposite". It just adds a probability-weighting consideration to decisions that were already complex.

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What This Means If You're Sitting Tight

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For most clients, sitting tight remains the right approach. The budget changes don't take effect until 1 July 2027. The legislation still has to pass parliament. The election is more than two years away. Grandfathering protects properties already held.

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Making large structural decisions (selling existing investments, restructuring trusts, accelerating new purchases) based on policy that may or may not survive a future election is generally not a good plan. The right approach for most investors is to make decisions based on the current rules as legislated, factor in the strong possibility they will take effect on schedule, and adjust if and when the political landscape genuinely changes.

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That's also the position most tax specialists are taking this week. Pitcher Partners, Holding Redlich, and others have published client updates that essentially say: plan for the rules as announced, monitor the political situation, and don't make irreversible decisions based on speculation about an election that hasn't happened.

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Where We Come In

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The lending side of any property decision doesn't change based on which tax rules eventually apply. What changes is which property strategies make sense, and that's a conversation between you and your accountant.

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Our role is to make sure that whatever strategy you and your accountant land on (sit tight, restructure, buy now under transitional rules, focus on new builds, exit before 1 July 2027), the lending is structured to support it cleanly. That includes thinking about how a refinance might be timed differently if you're planning a longer hold, or how borrowing capacity stacks up across different lender policies if you're considering a new build versus established purchase.

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If the political noise has you uncertain about what to do, the most useful first step is usually a conversation that separates what's known from what's speculation. Get in touch when you're ready to have it.

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Have a chat with the team at Claremont Financial.