Australia's housing tax overhaul passed parliament on June 25, 2026. From July 1, 2027, negative gearing on established residential properties purchased after Budget night will be restricted, and the 50% CGT discount will be replaced. Here is what the confirmed law means for first home buyers right now.
Australia's housing tax overhaul became law on June 25, 2026, after clearing the Senate. The legislation limits negative gearing on established residential properties to new builds from 1 July 2027, and replaces the 50% capital gains tax discount with cost base indexation and a 30% minimum tax rate. For first home buyers, the passage of this bill is not just political news - it confirms a shift in the competitive landscape that has already begun to play out at the auction coalface.
The key changes take effect from 1 July 2027, not today - but the trigger date for which properties are affected is already in the past. Here is how it breaks down:
The ATO has published detailed guidance confirming these rules. The first reaction from property professionals is broadly that investors who bought after Budget night are already weighing up their options - and many are redirecting purchase plans toward new builds.
Between today and 1 July 2027, the established property market is navigating a transition period. Investors who bought established homes after May 12 know their tax position is fundamentally different from the one they expected. Some will hold regardless. Others have already begun to pull back from bidding at auctions for established properties.
The data reflects this. The combined capital city auction clearance rate fell below 50% in the week ending June 21 - the first time since April 2020. Vendor discounting is running at around 3.1% nationally. Sydney and Melbourne dwelling values are sitting roughly 2-3% below their late 2025 peaks. These conditions are not entirely caused by the tax reform - three RBA rate rises in 2026 have also tightened buyer budgets - but the pullback in investor competition for established homes is a contributing factor.
For a first home buyer who is considering a property that would have attracted heavy investor interest a year ago, the comparison is stark. The number of competing bidders at auctions has fallen sharply in some segments, and properties are sitting on the market longer before selling. That gives buyers more time to do due diligence and, in many cases, more room to negotiate.
New builds retain full negative gearing and the CGT discount under the new law, so investor demand has not disappeared - it is redirecting. Builders and developers are seeing renewed interest from investors who are now more focused on house and land packages and new apartment projects. The government's 100,000 homes initiative, which reserves new dwellings exclusively for first home buyers, is designed partly to prevent this redirection from competing directly with FHBs in the new-build space.
What this means practically: competition in the established property market is softer, while some new-build segments are seeing sustained demand from investors pivoting away from established homes. First home buyers comparing the two types of property need to factor this dynamic into their planning, particularly in states where new-build supply is constrained.
The legislation becoming law removes the uncertainty that existed since the May 2026 budget announcement. That certainty itself matters - investors, buyers and lenders can now all plan with a confirmed set of rules, rather than waiting to see whether the bill would pass.
For first home buyers, the practical picture looks like this:
Use these tools to understand how the current market conditions affect your specific situation: