Property Hub - Investment Insights & Inspiration - Get Invested Special: The new post-budget property tax investor’s playbook

Starting point is 00:00:00 Welcome, Freedom Fighters. What if this week's federal budget didn't just change a few tax rules, but quietly rewrote the entire property investor rulebook? What if some investors have been protected, but not left untouched? What if new investors are now playing a completely different game? New builds have been handed the shiny tax pattern, established property has been told to go and stand on the corner, trusts have copped the sleeper hit,

Starting point is 00:00:27 and the government has broken its own supply-first, no-property tax changes promise with the straight face of a cat sitting beside a smashed vase. And what if, buried inside all of this budget noise, there's one critical opportunity that most investors will completely miss because they'll be too busy panicking, posturing or repeating headlines like a galah with a Sky News subscription. Because this is not a beige spreadsheet episode.

Starting point is 00:00:55 there's no policy porridge here no tax office lullaby in orthopedic shoes this is the morning after budget briefing for anyone who owns property wants property rents property was hoping property might help them keep off a dog food and baked beans diet when they retire and following a flood of your emails and messages yes i'm again pressing pause in our annual property wealth clock rollout because this budget directly reshapes the E for examine question which is what can you actually do now. So today we're unpacking what the property tax changes really mean, who's protected, who's punished, who may have just had an unexpected strategic advantage and what existing and aspiring investors need to be doing next. And stay with me right through to the end because I'll

Starting point is 00:01:47 reveal the one investor opportunity that may become more powerful after this budget, not less. So welcome to this Get Invested special. Grandfathered, gutted or gifted? The new post-budget property tax investor's playbook. So let's get invested and I'll see you on the inside. Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show for Australians who want to learn how to unlock their full self, health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the best investors, experts, leaders and founders to find out what it takes to break free from the grind, discover freedom and to live by design. Subscribe now and join me and get invested in the life that you really want.

Starting point is 00:02:37 Let's get started. Hi Fred Potters. Well, the budget bomb has finally landed. And if you're an existing property investor, aspiring investor, event investor, homeowner, first home buyer, or simply someone trying to build enough financial freeway to retire with dignity rather than asking to send a link for directions of 17, then I suspect you spent the last few days asking some version of, what on earth does all this mean for me? because the headlines have been louder than a cockatoo trapping a biscuit team. Negative gearing chains, CGT overhaul, trust tax, investors targeted, young buyers helped, prices have softened, rents barely affected, budget fairness and intergenerational equity restored, and depending on which paper you opened, which podcast you heard, or which cousin with a self-declared PhD in baseball tax law

Starting point is 00:03:31 was holding court of a family group chat, You may have come away thinking property investing is finished or property investing is untouched or property investing is now only for builders or property investing has somehow been transformed into a government-approved charity exercise with stamp duty. So today, we're going to clear the fog because following last week's CGT, NG and OMG special,

Starting point is 00:03:58 a stack of you reached out and said, Bushy, once the budget lands, please unpack what actually changed, what it really means and what we need to do now. So that's exactly what we're going to be doing. And because these changes are important, wired and likely to affect investor decisions for years to come, taking the time to unpack this properly and deeply. So this may not be the episode that you inhale while bawling a female at the end. You may choose and listen to it over a couple of sittings. You may want to save it, bookmark it, come back to it, or even listen more than once as the details start to matter your own decisions. Because my aim today is not simply to give you a hot tape that evaporates

Starting point is 00:04:40 before your coffee cools. It's to give you a clear, practical, ready reference guide to a new post-budget property landscape. So that as the significant changes start rolling out, as the key dates get closer, and as you start asking, what does this actually mean for me now? you have somewhere useful to come back to. Not with panic, not with started poison with pom-poms, not by pretending the budget's either for second coming or the end of civilisation, but with clear eyes, plain English,

Starting point is 00:05:13 a bit of cheek and the focus where it belongs. What this means for your future decisions because this budget has created three very different emotional reactions. So let me put faces on them. Firstly, there's Greg and Joy. Late 50s, they've worked hard for decades, they've got their own home, they've got three investment properties,

Starting point is 00:05:37 they've got inside retirement, and they've made a series of long-term decisions based on the rules successive governments told them were legitimate. They're not sitting in a gold-plated bar flying $50 notes at a call. They've carried debt. They've taken risks. They've gone without.

Starting point is 00:05:54 They dealt with repairs, vacancies, land tax, insurance rises and interest rates that had been about as friendly as a magpie in the nesting season. And now they're asking, are we safe? Are our current properties protected? What happens to the capital gains we were counting on to fund our retirement? Has the finishing line moved just as we've started

Starting point is 00:06:14 to mum the final lap? Then there's an at-and-roar. Early 40s, two good incomes, still 10 to 15. years away from financial freedom. They already own a couple of investments. One's done well, the other's okay, but holding costs have become a bit of a needy house test. They were planning the next move, maybe a third property, maybe an upgrade to their portfolio quality, maybe finally turning one day into a proper freedom of numbers plan. Now they're asking, does the old strategy still work? Should we buy again? Should we look at new bills now?

Starting point is 00:06:53 Should we be getting our property's value before the 1st of July, 2027? Does our ownership structure still make sense? Are we better to hold longer, sell sooner, or stop reading headlines before we do something silly? And then there's Liam and Sophie. Hit 30s, took kids, decent incomes and mortgage. They can't yet afford their ideal home

Starting point is 00:07:15 in the suburb where they might live, so they've been considering rent vesting. Rent where what? Like works, invest where the numbers work. Perfectly rational for a generation whose holding options have been squeezed like a toothpaste tube run on a vineyard. They were waiting for the budget before deciding whether to take action, and now they're asking is investing in established property still worth it?

Starting point is 00:07:41 Have we missed the old rules? Are we now being pushed into new builds? Will rents get worse while we wait? Has the government helped us or quietly narrowed one of the few levers that we still had left? MacFreedom fighters is why this episode matters, because these aren't abstract text sentences. They land at our kitchen table, sir. They land in sideline applications.

Starting point is 00:08:06 They land in our retirement plans. They land in whether our young family takes a measured step forward, gives up because the whole thing now feels like a board game where Canberra keeps changing the rules whenever someone starts doing well. So today, I'm going to walk you through what actually changed, what didn't, what was grandfathered, what wasn't, what looks like a genuine investor hit, what looks like a political sales pitch with a few facts wearing party hats, and where the opportunity now sits for calm, strategic investors who don't confuse loud headlines with lasting fundamentals.

Starting point is 00:08:43 Now, before we go any further, two important things. First, this is based on what was announced in the federal budget and the supporting materials released so far. The broad policy arc sketches are very clear, but some of the operational details will still depend on the graph legislation, ATO guidance and how lenders, accountants and tax advisors actually interpret the machinery. So this is the math. Knock the signed contract from the mechanic who's already got your engineering pieces. Second, I'm not your accountant. I'm not your tax lawyer.

Starting point is 00:09:16 I'm not your financial advisor, and I certainly don't know your exact numbers, your loans, your entity structures, your risk appetite, or what wakes you up at 3.17 a.m. in the morning, staring at the ceiling like a possum doing interest rate maths. So everything today is general information to help you ask smarter questions, to spot the big strategic shifts, and know where you may need qualified advice based on your own circumstances, analysis because this is important and you don't want to make permanent decisions from temporary

Starting point is 00:09:50 panic. Now, here's the first surprise. The budget did not smash every investor with the same hammer. You did something more subtle and in some ways, some ways more dangerous. It split the market into new lanes. Existing investors, future established property investors, new building investors trust investors and super and institutional structures and those lanes now need to do very they now lead to very different outcomes so before we judge it before we rage at it before we restructure anything or start shopping for tax-effective paddocks with suspiciously shy brochures we need to understand a new rule book and that's where to go next. Because I don't want you to worry. And I'm not about to turn this into a tax

Starting point is 00:10:43 seminar where you're sold quietly legs you're bobbing through your left ear. So let's keep it simple. And we'll keep it visual. And we'll focus on what actually matters for you as an investor. Because the budget didn't announce one property tax change. It announced a small family of them. And like most families, some are louder than others, some are more expensive than they actually first appear, and one or two will cause arguments for Christmas. So let's take them one by one. The first baby is negative hearing. This is the one that most people have heard about and quite a few have already in some story. So let's strip it back. Under the rules we actually know for decades, if your investment property made a taxable loss,

Starting point is 00:11:28 meaning the rent didn't cover the allowable costs like interest, property management, rates, insurance, maintenance and other deductions, you could generally use that loss to reduce the tax that you actually paid on your other income, usually your salary, sometimes business income. So in plain English, if your property was cash flow negative and tax negative, the tax system gave you a bit of annual paying leverage, not a free lunch or like a cannibal for the holding cost headache. It didn't make a bad property good, but it did soften the yearly cash flow blow while you waited for the long-term growth to do its thing. Now, under the new budget rules, there are three different lanes here, and this matters. Lane one,

Starting point is 00:12:16 if you already owned an established investment property before budget night, or you had already exchanged a contract before 7.30 p.m. AES, Australian Eastern Standard Time, on the 12th of May, 2026, your negative gearing treatment is effectively preserved for that property until you sell it. That's the strongest grandfathering protection in the package, but more on grandfathering in a moment. Lane two, if you buy an established residential investment property after budget night, then from the 1st of July 2027, you can no longer use losses from that property to reduce tax on your wages or other non-property income. Instead, those losses get fenced off, quarantined, locked in the residential property paddock. They can still be used, but only

Starting point is 00:13:09 against future residential rental income or future residential capital gains. So the deduction hasn't necessarily vanished forever, but it can't come to your rescue each year by lowering the tax and salary. It has to sit there like a bored kelpie waiting at the gate until enough property income capital gain eventually turns up. And this is a crucial distinction because some commentators will say negative gearing's gone. That's too loose. Others will say nothing really changes because you still get the deduction eventually but that's too cute the truth is in the middle the deduction may not disappear forever but the cash flow oxygen gets taken away when many investors need it most and in real life cash flow isn't a footnote cash flow is what keeps you

Starting point is 00:14:02 holding the property through interest rate rises vacancies school fees broken hot water systems and those charming little insurance renewal letters that now arrive with all the warmth of a ransom note. So for a new investor buying established property under these rules, property may feel materially more expensive to hold than to rent. How much more? Well, that's going to depend on your income, tax rate, loan size, your interest rate, your depreciation, your rent

Starting point is 00:14:29 and the property itself. But in some high-debt, negatively-eared scenarios, after-tax holding costs can live very shallowly. And based on the sort of detailed holding cost modelling I've previously run for best clients, it can in some cases roughly double, compared with the old world where the annual tax benefit came back in the old world.

Starting point is 00:14:53 That's not a universal rule, but it is a very real risk. And we'll make that much more tangible later in the episode when we walk you through Dave and Mel's example. because this is one of the biggest practical changes for the younger and newer investors. Property may still work over the long term,

Starting point is 00:15:13 but it becomes hard of a hold in the new buildings. And holding power is where long-term wealth is either made or quietly mugged out of car park. Lane three, if you buy a qualifying new build, negative gearing still works much as a living form. You can still use rental losses against other income, subject, of course, to your own circumstances and the usual tax rules.

Starting point is 00:15:39 That's deliberate. The government is trying to push invested capital away from competing for established homes and toward new housing supply. Now, whether that will work cleanly is a separate issue. And to spoil it, it probably won't work nearly as cleanly as a brochure suggests. But that's the design.

Starting point is 00:16:00 So to summarise, an existing established property, protected if you've already held it. A future established property, always stripped of it. Qualifying new build, the tax favour line. That's the negative gearing reset. The second baby is capital gains tax, CGT. Now, this is the deeper change. Because negative gearing affects your end holding cost,

Starting point is 00:16:27 CGT affects your eventual reward, your exit, your retirement mass, your long-term compounding price at the end of the long and tortuous problem. So this one really matters. Under the old rules, if you held an investment asset for more than 12 months, then, broadly speaking, individuals and eligible trusts could access a 50% CGT discount. So if your investment property made a $400,000 capital gain, half or $200,000 of that gain was roughly added to your taxable income in that financial and minus cost place.

Starting point is 00:17:07 And you were generally taxed at the resulting marginal rate, so not the full $400,000. Again, very simple version. And I bet your accountants were really twitching. But that's the idea. Half the gain was involved in the taxed barbecue, the other half got to stay home. But from the 1st of July, 2027,

Starting point is 00:17:30 so just over 12 months' time, that changes. The 50% CGT discount is being replaced with an inflation-based indexation approach, plus a 30% minimum tax on real capital gains. Now, don't let the word indexation make your brain fold itself into a deck chair. It simply means this. Before working out your taxable capital gain,

Starting point is 00:17:56 the tax system adjusts your original purchase price for inflation. So let's use a very simple picture. Imagine you bought a property for $500,000. Years later, you sell it for $900,000. First glance, that looks like a $400,000 gain. But indexation says, hang on, some of that increase isn't true. real growth some of it is just inflation making dollars worth less over time so the system lifts

Starting point is 00:18:25 your original five hundred thousand dollar cost base to an inflation adjusted number so let's say purely for illustration that becomes six hundred and fifty thousand then your gain is not calculated as nine hundred thousand minus five hundred thousand it's calculated as nine hundred thousand minus the inflation-adjusted $650,000. So your taxable real gain would be $250,000, not the $400,000, which, depending on actual inflation rates, could be higher or lower than the $200,000 taxable gain

Starting point is 00:19:04 under the pre-budget 50% CGT discount system. So in plain English, indexation tries to tax you on the real economic gain, not the part that came from inflation quietly eating away at your purchasing power of money while you're busy paying land tax and trying to find a plumber who wants to stay fine. And using the analogy that I mentioned last week,

Starting point is 00:19:26 it's like saying, don't tax me for the treadmill moving underneath me, tax me for how far that I actually ran. That's indexation. So is indexation better or worse than the old 5% discount? Well, here comes the annoying but honest answer. It depends. If inflation is high and the assets growth is more moderate, indexation can look more

Starting point is 00:19:50 generous. If inflation is lower and your property grows strongly well above inflation, then the old 50% CGT discount may have been far more valuable. So anyone telling you indexation is always terrible or always fantastic is doing tax commentary with the position of a bloke trying to thread a needle on a GESCO, confident perhaps, but not especially very useful. And then lay it over the top is the new 30% minimum tax on real capital gains. Now that part would need much more draft legislation detail and accountant somersaults before advisors can model every edge case for servitude. But the broad message is clear enough. Many investors, especially high growth investors who are hoping to realise gains in lower income years and benefit from wider effective tax, the exit tax

Starting point is 00:20:46 outcome may now become less flexible and potentially less favourable. And this is one of the great sleepers in the budget, because negative gearing gets the headlines, but CGT is where the longer term wealth effect really starts to change. now here's the part existing investors need to understand the budget does not retrospectively rewrite the tax treatment on capital gains you've already accrued up to the 1st of July 2027 and that matters so if you bought a property years ago and it's grown strongly in value up to and by the 1st of July 2027 that pre-2027 gain still gets assessed under the old treatment Any gain that improves after the 1st of July, 2027, moves into the new regime.

Starting point is 00:21:38 That's why existing investors are protected, but not untouched. So let me make that easy to picture. Say you bought a property for $500,000 and by the 1st of July, 2027, it's worth $900,000. That's $400,000 of growth already accrued before the changeover date remains in the old bull market. Then, let's say you hold it for many more years and eventually sell it for 1.3 million. The extra 400,000 on growth from the 900,000 up to the 1.3 million is the part that falls into the new rule tax plan.

Starting point is 00:22:16 So at sale, your accountant may effectively need to divide the capital gain into two years, the old world gain and the new world gain. The budget says there will be methods that can do that. including a valuation at 1st of July 2027 or an ATO apportionment approach, which sounds dangerous. And this means, yes, valuers are going to become very popular, accountants are going to become even busier, and their bills may start breeding like rabbits in your veggie patch.

Starting point is 00:22:49 Now, should every existing investor race out tomorrow and order a valuation? Not necessarily. We need the final mechanics. We need the draft legislation. we need ATO guidance. But should you be aware that valuation planning before the 1st of July may become very important? Absolutely. Because the better your records, the cleaner your future tax position may be. And this is not the sort of thing that you want to leave to a shoebox

Starting point is 00:23:19 for faded receipts and a screenshot from realestate.com.au taken in 2029. next is the third baby grandfathering now we touched on this last week before the budget landed but now we know what the government has actually done grandfathering matters because it answers one very simple human question did Canberra change the rules on decisions I've already made the answer is on negative gearing mostly no on CGT partly yes the future gains That's the plain English truth. If you already held an established investment probably before budget night,

Starting point is 00:23:59 negative gearing continues under the old rules until you dispose of it. That's meaningful protection. And it means some of the worst fears about immediate cashflow evangelism for existing holders didn't eventuate. That's good. And we should say that.

Starting point is 00:24:14 But on CGT, you don't receive a forever free pass. Gain accrued up to the 1st of July, 2027. and it's preserved under the old treatment. The gain after that date is assessed under the new framework. So when you hear someone say existing investors are completely unaffected, that's wrong. When you hear someone say the government has retrospectively taxed all your past gains,

Starting point is 00:24:37 that's also wrong. The real answer is more nuanced. Existing investors have been cushioned, not cloned into a tax-proof apartment. And for investors in the last 10 to 15 years of their accumulation or retirement runway, that distinction could matter a lot, especially if the property still has strong long-term growth ahead, because the later growth may now be taxed very differently from the earlier growth. And that may change when you sell,

Starting point is 00:25:08 whether you sell, whether you refinance instead, whether you pass assets on, whether you simply hold longer and adjust your retirement plan. We'll come back to those strategic questions a bit later. Then comes your fourth baby, new builds. Here's where the budget has clearly laid out its preferred pathway. If you invest in a qualifying new residential build, you remain in the tax-favoured line. You can still access negative gearing against other income, and when you eventually sell,

Starting point is 00:25:40 you'll be able to choose between the old 50% CGT discount or the new indexation plus minimum tax method, depending on which is more beneficial to you at the time and that optionality is powerful and the government's done it for one very obvious reason it wants more investor capital to go toward adding new housing supply instead of competing for the same established dwellings but here's a trap a qualifying new build is not simply anything with fresh paint and the builder's logo on the brochure the budget material indicates that new supply broadly includes construction on vacant land and redevelopment where one dwelling is replaced by more dwellings but a simple one-for-one

Starting point is 00:26:24 knockdown rebuild or a renovation that doesn't add net supply does not qualify for the special treatment and once that new property is later resold the next investor doesn't simply inherit the same new build tax status forever so there's some very important boundaries here now as an architect and project manager i've been a very long supporter of the right kind of new build before covid turned construction timelines into a game of guess which quote is no longer valid i was a very strong advocate of well-selected well-managed new builds why because done properly they can offer lower stamp duty full depreciation benefits lower early maintenance better tenant appeal, better owner-occupier appeal, and sometimes the great opportunity to manufacture equity

Starting point is 00:27:11 through smart design and project management. But, and this is a very big but, building new is not simply buying existing property with a high of the asbestos. It's a different language. Risk, different process, team, different feasibility, different headaches. And if you buy the wrong new build in the wrong area for the wrong reason, you may end up with a shiny tax-effective lemon parked beside 400 nearly identical lemons at the edge of a roundabout that no-one asked for. So yes, this budget makes the right new builds more strategically attractive.

Starting point is 00:27:48 But it doesn't magically turn every fringe estate into portfolio gold. Tax can tilt the playing field, but it can't make poor demand disappear. It can't create scarcity where land stretches to the horizon. and it can't replace due diligence. That will matter enormously when I get to the new post-budget investor sweet spot

Starting point is 00:28:11 later on in the episode, so listen out for that. The fifth baby is trust. Now, this is the sleeper here. It's received less casual barbecue chatter and negative gearing in the CGT. But for many investors, business owners, families who've been using discretionary trusts,

Starting point is 00:28:30 this could become a very serious issue from the 1st of july 2028 so just over two years time discretionary trust will face a minimum tax of 30 percent and there are some important exclusions and we'll unpack some of them later when i talk about the new investor playbook and quickfire q a but the broad point is this if you've been using a family trust for flexibility income distribution, asset protection, or because your accountant or a debt strategy guru told you it was the next new shiny borrowing capacity rocket ship, well, you now need to pay attention because that rocket ship may just have a very large ATO-shaped satellite drifting into your flight path. And I'll say this plainly, over the last year or so, I've been increasingly cautious

Starting point is 00:29:24 about the rush toward trust-based property buying structures, especially where people were being sold the idea that a special purpose vehicle or SPV or trust lending structure could keep your buying capacity rolling forever. I said at the time, this had a house of cards feel because when strategies become popular, too promotional, too aggressively sold as a loophole,

Starting point is 00:29:49 you can almost hear the regulators sharpening their pencils. and now the budget has fired a very loud warning shot through that space. Now, to be crystal clear, trusts aren't dead. They can still serve very legitimate purposes, asset protection, family wealth transfer, business structuring, estate planning, some investment strategies

Starting point is 00:30:09 and there are different types of trusts with different treatments but the old days of blindly saying just buy it, put it in a trust that fixes everything are well and truly over. if, in fact, they were ever live in the first place. And later in this episode, we'll unpack what a discretionary trust is, what a fixed trust is, what a widely held trust is, what a complying super fund is, what the 30% minimum actually means, and why rollover relief sounds friendly

Starting point is 00:30:40 but can still hide a stamp duty crocodile under the water. so that's your new rule book uh family in pretty broad strokes so to summarize with negative gearing existing established holdings mostly protected future established purchases restricted qualifying new builds favored a cgt 50 discount moving to indexation plus a minimum tax Old gains protected up to the 1st of July, 2027, and future gains under the new method. The grandfathering, it's real on negative gearing and partial on CGT,

Starting point is 00:31:20 which is important for every existing investor to understand. The new builds, clearly a vantage, but only where the project is genuinely new supply and genuinely a good investment. And for trust, the sleeper hit. 30% minimum tax from the 1st of July, 2028, with major implications for investors who choose structures that now deserve a full professional review. Now, if that all sounds like a lot, it is. This is not a minor tax tweak. This is a genuine property investment rule change.

Starting point is 00:31:56 But before we even get to what you should do, we need to address the elephant standing in the budget room wearing a treasurer's tie and pretending that no one saw him come in because the government told Australians this was not the path it was taking and now it's taken up so next we need to talk about the backflip the broken promise why trust may be the most expensive thing that this budget's damaged because this part really matters not just politically but practically, emotionally, strategically, because long-term investment runs on more than money. It runs on confidence. It runs on trust. It runs on people being able to make 20 decisions without wondering whether the government will suddenly wander in halfway through

Starting point is 00:32:48 and rearrange the furniture in the sledgehammer. And on this issue, the government didn't merely adjust its position. It performed a full Olympic standard policy backflip, a double pike, a half twist, and somehow still landed with a press release claiming it was standing still all along. So let's rewind. Back in October 2024 and prior to the election, Treasurer Jim Chalmers was asked directly about changing negative gearing and the capital gains tax discount. And his answer wasn't vague it wasn't look at that it wasn't everything's on the table and it wasn't watch this space he said the government was not going down the path of changing those arrangements he said housing was primarily a supply challenge which it is he said they were focused almost entirely on supply

Starting point is 00:33:42 and he said changing or abolishing negative gearing or the cgd discount would not make a meaningful difference there. That's right. And this was backed up by our PM Albo, who repeatedly said they wouldn't touch it. That was their pre-election position promise. Clear, direct, unambiguous, and now, yeah. Negative gearing has been restricted for future established residential property investors. The 50% CGT discount has been replaced for future gains with indexation and a minimum tax. Trusts have been tighter and the budget has been sold

Starting point is 00:34:22 as a housing fairness reform. So let's call this what it is, a broken promise, backflip, a trust withdrawal that leaves a very ugly negative balance. And before someone says, ah, bushing,

Starting point is 00:34:38 politics changes, circumstance evolve, governments respond to new evidence, fine. Conditions can change. Evidence can change. Policy can change, but when a Treasurer and the Prime Minister look us in the eye and tell us all quite plainly that this is not the road being taken, and then 18 months later drive a tax

Starting point is 00:34:58 bulldozer straight down that road, well, we're entitled to feel misled. That's not being unreasonable. That's basic pattern recognition. And seriously, these guys are slipperier than cat poo on lino and socks and this matters far beyond one budget because if you're an investor you don't make decisions for next thursday you make decisions for the next 10 15 and 20 years or more you borrow large sums you structure debt you choose ownership entities you calculate holding costs you forecast retirement income decide whether to buy now hold longer sell later or build a portfolio that means that you don't have to rely on the age pension after 40 years of work. You sacrifice for years on the promise of a better future. And when governments change

Starting point is 00:35:46 the tax rules after previously saying they won't, that doesn't just change a spreadsheet, it changes behaviour. It lowers trust. It increases hesitation. It makes business owners wonder what other not-on-the-table policies are quietly sitting under the table wearing camouflage pants. Investment markets can handle tough rules better than surprise rules. But what investment markets hate is when the referee changes the whistle halfway through the game. That's the real issue here. Not that government can never reform tax. Of course it can. Not that housing policy should never be removed. Of course it should. But if you want Australians to invest with confidence to take risk, to build businesses, to provide rental housing, to self-fund their

Starting point is 00:36:35 retirement, then the rule book can't feel like a cafe special award that gets rubbed out whenever Canberra needs a few more dollars to fill their overspent till. It's a bit like being told that the bridge is free, driving halfway across and then finding a toll booth, a speed camera, a bloke high-vis asking for your grandfather's maiden name and a minister smiling beside a sign that says this is improving transport fairness. No, it's charging you after you already committed to the crossing and we Aussies are smart enough to notice and remember it next time we vote. Now to be fair the budget has largely protected existing investors on negative gearing. That matters. They could have reached backwards more aggressively and they didn't and that's important to acknowledge

Starting point is 00:37:23 but they've still changed the rules for future property investors and they've still changed the CGT treatment for future gains on existing assets after the 1st of July next year. So existing investors are not untouched and new investors are clearly disadvantaged relative to those who bought before budget night. And younger Australians who are planning to invest their way toward independence, including rent investors who can't yet afford

Starting point is 00:37:48 their dream home where they actually live, have just been handed a steeper hill and a smaller backpack of tax support. All under a banner that says intergenerational fairness and equity. We'll come to that shortly because that phrase deserves a very close look. But before we do, let me say this as plainly as I can.

Starting point is 00:38:09 You should remember this the next time you vote. Not because I'm here to tell you which bot to fix. That's entirely your decision. But because trust matters, promises matter And when politicians make clear commitments on major settings that affect long-term household decisions, then break them once the political wind changes direction, they deserve to be judged on that record. Not the slogan, not the ad, not the smiling photo wearing a hard hat next to a half-built duplex, but the record. because if Canberra can say we're not changing that and then change it and expect everyone to clap

Starting point is 00:38:46 because the new explanation has nice wrapping paper, then Australians are entitled to ask what else are we being told not to worry about right before we should start worrying. And please don't confuse a small, delayed-release, boiled-lolly tax relief with accountability. The government overspends, runs structural deficits, fails to pull the big productivity levers

Starting point is 00:39:12 then raids investment incentives and hands you back a few dollars with one hand while quietly taking far more optionality with the other that's not generosity that's just very polished wallet choreography where the trick looks smoother than the magician keeps you staring it on so yes the budget is a tax change story

Starting point is 00:39:35 but it's also a trust story and trust is incredibly hard to rebuild once you've smashed it like a drop plate in a tiled kitchen. You can glue it back together, but everyone can still see the cracks. And here's where the plot turns, because the government is selling this broken promise as a moral necessity.

Starting point is 00:39:57 It's something being done for younger Australians, for fairness, for affordability, for generations who feel locked out. That's the sales pitch. But when you follow the incentives, When you look at who is now more protected, who is now more discouraged, who still gets the tax favour line, and who is one of the few wealth-bearing letters made narrower, the story becomes far less tight. So next, we need to unpack the fairness cardigan and the tax grab trails that they're

Starting point is 00:40:28 hiding underneath, because that's exactly what we need to examine. The story being sold and the incentives actually being created. Now, to give the government its due, the public argument has a very polished front window. They say these changes are about intergenerational fairness, helping first-home buyers, making housing more accessible, taxing work less and wealth more consistently, encouraging productive investment and repairing the budget bottom line. That's the official story. And parts of it will resonate with a lot of Australians because housing frustration is real. Younger Aussies are understandably angry. Renters are under enormous pressure. First-home buyers do feel like they're trying to catch a train that

Starting point is 00:41:16 keeps speeding up every time they reach a platform. So I'm definitely not dismissing the pain. The pain's real. But here's the uncomfortable question. Does this budget actually fix the pain it claims to be treated? Or does it simply find a political, technically convenient route to blame, raise more revenue, hand out a small token worker tax sweetener and call the whole thing fairness? Because calling this package purely intergenerational fairness is like calling a parking fine an urban mindfulness therapy. Lovely wording, but the same hand in your wallet pocket. so let's separate the slogan from the substance if the real aim is to make housing meaningfully affordable then the big levers remain painfully obvious we need more viable supply faster planning

Starting point is 00:42:09 better infrastructure less regulatory drag construction that's actually financially feasible a more productive economy income growth that does more than shuffle sadly behind the prices. And a serious conversation about what happens when population growth runs fast over homes, hospitals, roads and rental stock that can keep up. Those are the real heavy lifting issues. Those are the slabs under the house. Tax changes are just the curtains. Yes they matter but curtains don't hold up the roof. And there's another elephant sitting squarely in the affordability lounge room, quietly eating the pot plant or Canberra pretends not to notice. Housing affordability is not just about the price of homes. It's about the relationship between home

Starting point is 00:42:59 prices and household incomes. In simple terms, if prices are the top one of the equation, then wages and earning power are the bottom line. And governments keep assessing over trying to soften the price side without doing nearly enough to strengthen the income side. Because the most durable way to improve affordability is not simply to make assets grow more slowly it's to help Australians earn more produce more create more value build better businesses innovate faster invest with confidence and enjoy the wage growth that comes from a more productive economy that's the denominator nobody wants to talk about at dinner because it's harder it requires real productivity reform, real business investment, real incentives and real tax reform for risk-taking

Starting point is 00:43:48 and innovation, real support for people to become more capable, more entrepreneurial and more financially independent, not just a tax tweet with a fairness ribbon tied around it. And that's one of my biggest concerns with this budget. It says it wants to improve fairness and encourage more productive investment, but in practice, it risks making ordinary Australians more cautious, less willing to invest less likely to take calculated risks more dependent on wages super and government settings they don't control that's not a productivity breakthrough that's a confidence handbrake wearing a policy badge because if you want younger Australians to afford more you should be helping them earn more build more own more and innovate not just telling them housing

Starting point is 00:44:34 would be fairer if the wealth building path their parents use becomes harder for them to access You don't fix intergenerational inequality by trimming a ladder and calling it a staircase upgrade. And the government's own modelling more or less admits that. It's not claiming a housing miracle. It's projecting a relatively modest slowing and house-proth growth. Notice that word, growth. They're promising some additional owner-occupiers over a decade

Starting point is 00:45:05 and only a small impact on rents, assuming the broader supply program does what it says it's going to do on the tin. That's not a revolution. That's a soft nudge. And in property, nudge can matter. But let's not dress up a soft nudge as a bulldozer, especially when the budget itself also acknowledges that the tax changes could mean fewer dwellings than otherwise,

Starting point is 00:45:29 unless the new infrastructure and supply measures are more than compensated. So the government is effectively saying we're going to reduce some investor incentives, which may reduce supply, but don't worry, we'll offset that with infrastructure and other reforms that require states, councils, utilities, builders and approval systems to all suddenly move

Starting point is 00:45:54 with the coordination of a Swiss watch. forgive me if i don't get set off the fireworks because government housing delivery hasn't exactly been a master class in ballet it's often looked more like six shopping trolleys tied together rolling down toward a roundabout now here's where i become particularly concerned the budget is being sold as helping younger australians but if you actually follow the incentives it may make it harder for many younger australians to build wealth through property especially those who can't afford to buy the home they want where they want to live and we're turning to rent vesting as a smarter first step toward financial independence like Sonia and I did when

Starting point is 00:46:35 we started nearly 30 years ago. Under the old world a younger high-income couple could say well we'll rent where life works, buy where the numbers work, accept some early holding cost, use the tax system to soften the blow hold a quality asset for long term and build our own future well that ladder hasn't been removed but it's definitely been narrowed it's been made steeper raised a little and then labeled fairer that's the part that doesn't sit well with me because if you make it harder for younger Australians to invest to innovate to make to take measured risks a little to self-fund their financial freedom, you haven't solved generational unfairness, you've just gift-wrapped dependency. And at a time when artificial intelligence may hollow out a lot

Starting point is 00:47:26 of repetitive work, administered for all sorts of chunks of middle management, shouldn't we be encouraging Australians to become more financially resilient, more entrepreneurial, more independently capitalised, more able to generate income outside of wage, more likely to support themselves in retirement rather than relying on the public purse of pensions. Instead, this budget risks nudging people back towards working under dependency, superannuation dependency and eventually, for some, a greater reliance on government support later in life. That's not a small philosophical issue. That's a national productivity issue and a national to be selling its issue. Now, to be balanced, the budget does contain measures aimed at supporting

Starting point is 00:48:15 business, start-ups and R&D, and that's good. We need to acknowledge that. But from a household wealth building perspective, the signal sent to future residential property investors is still clear. You'll get less tax support than the people who came before you. That's not intergenerational neutrality, that's an intergenerational rule change. And whether you think the old rules are too generous or entirely appropriate, you can't honestly pretend that reducing future access to property tax settings makes the path for self-funded wealth easier for younger investors. It doesn't. So when we hear the phrase intergenerational fairness, we need to ask, Venice for whom? The aspiring first home buyer who may face a little less competition in

Starting point is 00:49:06 some established markets? Possibly. For the renter whose landlord pool may shrink if replacement supply doesn't arrive quickly enough? Less obvious. The young rent fester who now faces higher holding costs and tighter strategy constraints? Hardly. For the government seeking more tax revenue from capital and trust to help fund the work of tax relief and shore up the budget? Well, that part looks very clear indeed. And that's why I keep coming back to this point. This is not comprehensive tax reform. It's selective tax extraction. If we were having a generally broad tax reform conversation, we'd be looking across income tax, consumption tax, state property taxes, stamp duty, land tax, company tax, retirement settings,

Starting point is 00:49:52 productivity incentives, and the way we tax capital work and risk as a whole. Instead, we've targeted a few politically loaded wealth-burning mechanisms, declared them a fairness problem and presented the resulting revenue as moral repair. That's a very neat political story, but neat doesn't always mean true. A ribbon and a bow on a wheelie bin

Starting point is 00:50:18 doesn't make it a Christmas present. And if this sounds a little sharp, good, because language matters. When governments increase taxes, they should have the courtesy to say it plainly. When they change major long-term investment settings, they should explain the trade-offs honestly. When they say this will improve fairness, they should also acknowledge who now loses an opportunity that earlier generations were allowed to use. And when they address a revenue-raising measure in a compassionate

Starting point is 00:50:49 cardigan, we're allowed to notice the tax grab trousers that are hiding underneath. now does that mean property investing is finished absolutely not does it mean young investors should give up no does it mean every budget claim is nonsense also no but it does mean you need to understand the real incentives created here not just the story being told about them because the new system doesn't merely change tax it changes who's advantaged who's discouraged who can hold certain assets more comfortably, where capital is likely to flow and what kind of property strategy will work best from here. Which brings us to the next big question. Who actually wins? Who actually loses? Who gets told they've won while quietly being handed a smaller ladder? So let's sort the

Starting point is 00:51:40 winners and losers, or perhaps more accurately, the protected, the punished and the people being quietly pushed somewhere else because this budget hasn't created one clean outcome it's created a new pecking order and once you see that pecking order the strategies just start to make a whole lot more sense so first the relatively protected and the first group is existing investors who already owned established residential investment property before budget on that's you then on negative gearing you've largely been protected your existing established properties keep their current negative gearing treatment until you dispose of them. That's significant. And it means the government stopped short of the most aggressive, backward-reaching raid that some investors fear.

Starting point is 00:52:25 That's the good news. But, and this is an important but, you're not completely untouched because your future capital growth after the 1st of July 2027 will still move into the new CGT regime. So the cleanest way to say it is this. Existing investors are protected on the annual holding costs side but partly exposed on the future exit tax side and that distinction matters especially if you're 10, 15 or 20 years from selling or if your retirement plan relies on holding, growing, refinancing and perhaps eventually selling one or more assets to reduce debt or to fund income. So if you're sitting there thinking thank goodness none of this affects me well not quite you don't need to panic but you do need to understand that your future gains are now

Starting point is 00:53:14 entering a very different tax world so protected yes untouched no the second group given a relatively good hand are new building investors and let's call this for what it is the budget has placed a bright yellow tax favoured arrow over qualifying new supply if you invest in the right qualify a new residential build, retain negative gearing against other income and the ability to choose between the old 50% CGD discount and the new indexation plus minimum tax method when you eventually sell. That's a material advantage. So investors who can buy or create the right new supply in the right location with the right feasibility have just been handed a stronger relative position than investors buying established stock after budget night. But let me underline the

Starting point is 00:54:05 phrase the right new supply because the budget doesn't turn every developer brochure into scripture. Doesn't mean every outer fringe house and land package suddenly becomes an investment masterpiece. It doesn't mean you should buy a dog box in the last paddock before the airport radar just because someone whispers tax-effective in your ear. A bad investment doesn't become a good investment because Canberra sprinkled a deduction on toll. That's just a bad investment wearing a party hat. Now, the third group who aren't intended to benefit

Starting point is 00:54:39 are owner-occupiers and first-home buyers. This is central to the government's story. Their argument is that tax settings make established drawings a little less attractive to future investors and some of that existing stock may shift towards owner-occupiers. And Treasury's modelling suggests the package could support around 75,000 additional owner-occupiers over a decade. Now, is that good for some buyers?

Starting point is 00:55:06 Yep, potentially. If you're a first-time buyer competing for a particular type of established property in a market where investors were a meaningful share of the competition, then at the margin, you may benefit. But let's keep a sense of proportion here. this is not a magic affordability it's not going to turn a $900,000 home into a $600,000 home because the treasurer held a press conference with serious eyebrows the government's own price

Starting point is 00:55:31 modeling points to a relatively modest line in price growth I emphasize the word growth not a great national reset button so first-home buyers may get a little more elbow room in some pockets. But they still face deposit hurdles, serviceability hurdles, interest rate hurdles, income hurdles, construction cost hurdles, and the simple problem that quality homes in desirable locations remain scarce. So yes, some help, but not the second coming of housing affordability. And there's another wrinkle here that almost no one's talking about yet, because the budget is trying to steer investors away from established homes and towards new builds. But where do many first-home buyers still have one of their few remaining footholds? Yeah, exactly, the more

Starting point is 00:56:21 affordable new home market. Depending on the state, that's often where first-home buyer grants, stamp duty relief, shared equity support and other home buyer incentives are more concentrated. So the government is effectively saying to first-home buyers, we want to help you into the new home market, while also saying to investors, we're making the same new home market the most tax-attractive lane for you too. That's not a clean affordability fix. That's inviting two very different groups to the same sausage sizzle,

Starting point is 00:56:55 then acting surprised when the line gets longer and the sausages get more expensive. because if investor capital now floods harder into qualifying new builds, especially at the lower and middle price points that still feel achievable for first-time buyers and affordable for investors, then demand rises, land values rise, build packages rise. Developers notice buyers have extra incentives and sharpen their pencils in the upward direction.

Starting point is 00:57:22 And the first-time buyer who was meant to be helped may discover they're now competing with more investors for the very homes they were told would become more accessible. So, yes, you may end up with more rental stock in some new-build corridors, but you may also get fewer affordable first homes for the people this policy claims to prioritise. And that's the fairness contradiction

Starting point is 00:57:46 sitting right in the middle of this budget. If their solution to helping first-home buyers is to intensify investor demand into one of the few new home price bands that they can actually and still realistically reach, then they haven't cleared the path. They've simply moved the crowd from one doorway to another. And then there's another very clear group of budget winners,

Starting point is 00:58:10 accountants, valuers, tax lawyers, and possibly anyone who owns a stationery business specialising in fattening invoice envelopes because the work coming out of these changes is going to be enormous. Valuations on the 1st of July, 2027, CGT apportionment, trust reviews, entity restructures, new build eligibility analysis, carry forward loss tracking,

Starting point is 00:58:33 borrowing capacity reassessments, retirement sales sequencing. This budget hasn't only created tax change, it's created a fresh professional service feeding frenzy. Busy as a bunning sausage ten on election day. Some of those professional bills may arrive with the weight of a small appliance. Now, let's turn to the groups who are clearly worse off. And the first is obvious, future investors. Buying established residential property after budget night. This is the group that's taken the cleanest hit. They face less annual tax support if the property is negatively geared, higher after-tax holding costs, likely reduced serviceability depending on how lenders treat quarantine losses, a less generous future CTT environment if the property grows

Starting point is 00:59:19 strongly above inflation, and less flexibility to build the classic established property wealth pathway that many earlier investors were allowed to use. Now, are established properties dead as investments? No, absolutely not. A scarce, high-demand, well-located established property with strong owner-occupier appeal can still be a very good asset, but the margin for laziness has now very much narrowed. The weak established property that only just worked because tax softened the holding cost. That one, I now start squeaking like an old screen door on a cyclone. And that brings us to a group I feel particularly concerned about, younger aspiring investors, because this budget is being marketed as helping them. But for many younger Australians,

Starting point is 01:00:05 particularly those who are planning to rent-vest, the path just got a lot more difficult. Rent-vesting is a strategy where you rent where you want to live and invest where the numbers make more sense. It's become one of the more realistic wealth-building pathways for younger households who can't buy their ideal home in their ideal location without taking on a mortgage the size of a small nation. And now, if their viable first investments are likely to be established on property, the annual holding costs may be higher, borrowing capacity may be tighter, which means the value of the property they can buy will be less, and the structure needs far more careful thought than it did a week ago. So is established property and bread investing dead? No, but it is harder. And for some moderate-income households, what was already a narrow bridge

Starting point is 01:00:55 has just lost another one of its handrails. That's why the intergenerational fairness argument rings hollow for me, because the government has not only made it slightly easier for some young people to compete for an owner-occupier home, it's also made it harder for some young people to invest their way towards financial freedom

Starting point is 01:01:14 with home ownership where they live remains out of their reach. That's not a clean win. That's a trade-off, and it should be spoken about honestly. Now, let's talk about renters because renters are being told this is good for them too. The government says the rent impact will be small, under $2 a week of the medium according to modelling, and I know mediums and averages are dangerous,

Starting point is 01:01:39 and I hope they're right. I generally do, because renters have had enough financial needs in their ribs for one generation. Here's the problem. Rents don't respond to press releases. They respond to vacancy rates. They respond to rental supply. They respond to how many households need homes. This is how many homes are available.

Starting point is 01:01:59 And if a tax change discourages part of the private rental market before new supply arrives in meaningful volume, renters can wear the pressure. that doesn't mean rents explode everywhere tomorrow markets are local different cities behave differently different suburbs behave differently different vacancy conditions matter we saw the same nuance in the 1980s debate when negative gearing was temporarily quarantined rental pressure wasn't uniform nationally but sydney and perth did experience very strong real rent growth in already tight markets and guess what they've been reversed at two years over. So the lesson isn't change one tax rule and rents will always skyrocket. That's too

Starting point is 01:02:42 simplistic. The lesson is when rental markets are really tight, which most are, making private rental investment less attractive is not something to do casually while humming the tune of fairness. Because the supply side doesn't deliver fast enough, which it certainly hasn't in recent years, then renters may end up being handed the bill for a policy they were told was designed to actually helpful. Now there's another group that may quietly find the ground shifting underneath them, the National High Volume Site Unseen Buyers Agency. And let me be fair here, there's some really good and excellent buyers agents. They're high integrity specialists who do proper local work. They understand the on the ground nuance. They care deeply about client fit and will be

Starting point is 01:03:30 even more valuable in the coming much more complex market but there's also a very fast growing corner of the industry built on podcast fame pressure marketing interstate artificial created hotspot lists standardized stock selection and pushing hordes of investors into the same established rental pockets until the suburb looks like it's got a buyer's agent queue outside every open home that model just got harder because if future established property purchases carried less annual tax support, and if asset selection has to work harder on cash flow, scarcity, growth fundamentals, and owner-occupied demand, then the just-buy-this-because-our-spreadsheet-says-the-suburbs-hop model gets exposed. Frankly, that may be one of the few accidental bits of good news inside this

Starting point is 01:04:17 budget, because this policy may be bad news for cookie-cutter properties brokers, and good news for real advisors who actually understand strategy. The loudest person with a ring light and a map of Australia may not be the smartest person to trust with your next 15 years. So where does all this leave us? The protected, existing investors on negative gearing. The favoured, qualifying new-build investors. The somewhat helped, certain first-time buyers and owner-occupiers

Starting point is 01:04:47 in specific property markets and pockets. The very busy, accountants, valuers, tax lawyers and anyone who reinforces in six-minute increments. Worse off, future established property investors. Potentially squeezed, younger rent festers and wealth builders who now face a much narrower path. The at-risk, when supply disappoints, renters. And the challenged, the high-volume tax-suffering property spruiking model.

Starting point is 01:05:14 But here's the most important thing. The real market impact will not come from budget payment number one. It will come from behaviour. Because markets don't react to laws in the abstract. They react to what humans think that those laws mean. And humans, as you may have noticed, are not always a perfectly calibrated economic instrument. Sometimes they overreact.

Starting point is 01:05:36 Sometimes they freeze. Sometimes they sell too soon. Sometimes they rush toward the wrong shiny thing. And sometimes that overreaction creates the exact window of opportunity that the car investor has been waiting for. So next, let's map the property shockwave. what's likely to happen to prices, rents, buying capacity, locations, property types, and opportunity

Starting point is 01:05:59 from the next few months through to the next 15 years. And let's walk through what happens. Properly, not the press conference version. Not the everything's fine, please enjoy your $250 tax set offset version. But the real world version. Because policies don't land in the back end. They land in markets already dealing with higher interest rates,

Starting point is 01:06:24 top rental supply, construction costs that still make many builders break into a nervous sweat, population growth, household budget pressure, state taxes, insurance jumps, and a global backdrop that currently feels about as stable as a folding chair at a sumo convention. So when a budget rewires property tax, the impacts will not be one neat national average. they will ripple through different markets at different speeds with different consequences all depending on who's buying, what they're buying, where they're buying, how leveraged they are and

Starting point is 01:06:57 whether they understand the rules or simply lose their heads to a headline. Now let's begin with the government's own school card. The government says these tax changes are expected to support around 75,000 additional homeowners over the next decade. It says house prices should go by around 2% less over a couple of years than they otherwise would have. And it says that median rents should rise by less than $2 a week as a result of these tax changes. It also acknowledges that tax changes on their own could mean fewer homes built than otherwise. But it says its new $2 billion local infrastructure fund, along with its broader housing program, will more than offset that by helping support up to $65,000 homes over the decade.

Starting point is 01:07:46 Now, is any of that impossible? No. Is it guaranteed? Absolutely not, because models are maps. The street still has potholes. Sometimes the map says easy highway, then you turn the corner and find three witch's hats, a flooded underpass and a council sign promising completion

Starting point is 01:08:06 subject to weather. So let's take the budget shockwave in timeframes. First, the immediate phase, the right now to the next few months. Because the first impact won't be mathematical, it'll be emotional. Confusion, hesitation, misunderstanding, hot takes being fired like confetti cannons at a financial planning wedding. Some existing investors will wrongly assume that they are totally unaffected. Some new investors will wrongly assume property's finished.

Starting point is 01:08:36 Some renters will celebrate a hoped-for housing victory. Some vendors will wonder whether to sell before markets shift. Some national buyers' agents will quietly swap their established growth stock slides for the new-build opportunity slides before breakfast. And every accountant, broker, tax lawyer and strategist will start receiving messages that say, quick question, which is never a quick question.

Starting point is 01:09:01 So in this immediate phase, I expect three kinds of behaviour. One, the freeze. Some people will stop. They'll pause buying. They'll pause selling. They'll pause refinancing. They'll pause everything until they feel they have clarity. That creates a temporary slowing in parts of the market,

Starting point is 01:09:17 especially where buyers are already stretched or the asset relies heavily on investor demand. Two, the scramble. Some investors will rush toward the new tax-fabric lane, new bills, development deals, off-the-plan stock, and anything with the phrase qualifying new supply whispered nearer. Some of that will be sensible. Some of them will be investors running hard

Starting point is 01:09:39 toward a shiny brochure like seagulls who want hot chips. Three, the overreaction. This is the one smart investors need to watch because whenever rules change, someone misreads the room, panics, and sells a good asset for the wrong reason. That doesn't mean the whole market falls over, but it may create pockets of temporary mispricing.

Starting point is 01:10:01 And for strategic investors with buying capacity, buffers, clarity, and a lot of vice, soon. That's where opportunity begins to flicker in the fog. Then comes the short-term phase, the three to 12-month period. This is where behaviour starts to show up in listings, inquiries, valuations, approval pipelines, and lender conversations. So I'd expect several things. First, investor demand for qualifying new builds will rise, not across every new development. But where the stock meets real demand and also enjoys the budget carve-outs, interest will build. The tax system has effectively put a bright sign over the lane saying

Starting point is 01:10:42 private investor capital, please enter here and investors will notice. Second, demand for post-budget established investment stock is likely to soften on the margins, especially in markets where holding costs were already high, yield was already thin, the growth story was weak and investors will rely more on tax relief than genuine asset strength. Those properties will not suddenly turn into pumpkins in the midnight, but they may lose some of their investor price support. That matters in investor-heavy pockets. Third, markets with strong owner-occupied debt may remain surprisingly resilient. Because if you own or are buying a scarce family home in a lifestyle location with jobs, schools, transport, services, land scarcity, and real emotional

Starting point is 01:11:30 demand, the buyer pool is not just investors. It's families who want to live there. And families don't stop wanting good homes because the camera changed the tax schedule. That's why I expect high-quality owner-occupier appeal property to hold up far better than tax-laden investor stock. The dross gets dragged down faster. Quality keeps floating to the top. Fourth, rents become a very important watch item. The government says the rent effect will be tiny, less than $2 a week at the medium minutes model, but the government's own housing authority depends on the broader supply package firing properly. That's a big catch. If new supply takes too long, construction feasibility remains poor, if planning reform gets stuck in the usual

Starting point is 01:12:16 bureaucratic mud bath, if infrastructure delivery arrives late, and private investor appetite for established range of stock falls sooner than new homes arrive, then rental pressure is likely to remain or worsen in already tight markets because the tax change is legislated and new homes have still yet to be built. That's a very different degree of certainty. One arrives with a budget speech, other arrives after approvals, land, labour, materials, finance, weather, utilities, and at least one person saying, sorry, that price was before the variation.

Starting point is 01:12:52 Then comes the medium-term phase, the next one to three years. This is where the market starts to reorganise itself more fully. By this stage, lenders will have had time to alter their calculators, credit policies and servicing assumptions if they choose to reflect the reduced value of wage offset negative during post-budget established property investors. Now, the precise lend response is not fully visible yet. So we need to be careful here.

Starting point is 01:13:23 But I'd expect this to matter because if a lender currently recognises tax benefits when assessing your ability to carry investment debt, those tax benefits no longer apply in the same way for certain future purchases, then some borrowing capacity is likely to shrink for those borrowers. Not universally, not by the same amount,

Starting point is 01:13:41 and not necessarily on grandfathered existing properties, but for new established property investors, yes, I expect a serviceability hit for some borrowers, which is going to affect purchase price. And if interest rates remain higher for longer, whether due to inflation, global shocks, geopolitical energy pressure or continued government overspend of settings, that borrowing capacity effect becomes more material. Because when rates rise and tax supports falls, your borrowing power can start walking with a very deciding leap. at the same time a new build premium may emerge in selected markets not everywhere but in strong locations where qualifying supply is generally scarce desirable and well designed the tax advantage may increase investor willingness to pay that could support the townhouses and

Starting point is 01:14:31 small homes small-scale boutique developments well-located four-bedroom family homes and new lots where supply remains constrained duplex or multi-dwelling projects where additional homes and genuinely created, and certain supply-adding strategies that now benefit from both investment fundamentals and tech settings. Here again, the tax tail can't wag the entire dog. The new-build premium will not rescue poorer, out-of-fringe stock, oversupplied investor estates, high-rise boxes with too many identical neighbours in the lift, or any project whose only strong feature is that someone

Starting point is 01:15:10 use the words budget-advantaged and boldfire. Tax support may accelerate good projects. It may also help disguise bad ones for a while. And that's why independent strategy becomes more important, not less. Now let's talk about locations. Over the next one to three years, I expect a widening gap between one, markets driven by genuine owner-occupied desirability, income growth, infrastructure scarcity and lifestyle appeal and two markets inflated mainly by investor herd behavior loan entry price and social media hospitality the second group is far more exposed because when holding costs rise and taxable investors become less tolerant of weak rent weak resale appeal and weak local demand so some of the more artificial buyers agent pump zones

Starting point is 01:16:00 where investors have been elbowing each other to overpay for similar established stock may call a lot faster. Frankly, that recalibration is overdue. A market should rise because demand is revealed, not because three national buyers' agents or podcast hosts all discovered the same postcode on Tuesday. And there's one more pressure point worth understanding here, because the budget hasn't simply made future established

Starting point is 01:16:26 residential property less tax effective than it was. It's also made it look a lot more administratively awkward compared with some other investment choices. Commercial property hasn't been hit by this specific residential negative gearing restriction, nor have investments like shares, ETFs, managed funds, or other non-residential assets been quarantined in the same way under the negative gearing change.

Starting point is 01:16:52 Now, that doesn't mean those assets are automatically safer or better or more suitable for the average property investor. Let's now compare a townhouse... sorry let's not compare a townhouse with bitcoin as though they're two flavors of the same yogurt they're not but from a tax flow perspective and a tax cash flow perspective some investors may now look at established residential property and say hang on this has become way more complicated to hold while other gig investments may still allow losses to interact with my broader tax

Starting point is 01:17:27 position more cleanly. And when enough investors start thinking that way, capital moves. Not all of it, not overnight, but at the margin. Some future investment dollars that may have gone into established residential property could instead flow toward new builds, commercial property, shares and funds, or other structures that now look to be relatively simpler on board tax flexible. And if that happens, future established residential property loses a slice of its investor demand, not enough to kill the asset class, but enough to matter in the weaker, more investor-dependent segments of the market, because markets don't need every buyer

Starting point is 01:18:07 to leave prices to soften. Sometimes they only need the marginal buyer to hesitate. Now, let's move to the longer-term phase, the next three to 15 years, because this is the phase that most headlines barely have ever discussed, but it's the phase that matters most to real investors because you don't buy a property for the afternoon after the budget. You buy it for the decades after the noise and over the long term, I expect the following.

Starting point is 01:18:37 First, investors will hold good assets longer. CGT friction usually discourages unnecessary selling. If selling becomes less tax favourable, people may choose to hold longer, refinance rather than sell, restructure retirement timing or preserve grandfathered positions where they're valuable to them. Now that may reduce market turnover in some segments and lower turnover can itself support scarcity in tightly held areas as we've been seeing across the country over the last

Starting point is 01:19:10 couple of years. Second portfolio quality will matter far more than the door count. The old brag of I own 10 properties will matter less than what do they earn? What do they cost? How exposed are they? How good are the locations? And how strong is the owner-occupier resale pool? And what's the exit pathway? As well as can you actually hold them when conditions turn unfriendly? Quality without quality is just a larger collection of problems with leather boxes. Third, ownership structure will become far more strategic. Personal names, trust, companies, suba, fixed entitlements, new builds, commercial assets, these will now require far more deliberate thinking up front.

Starting point is 01:19:58 The casual, we'll work it out later approach gets way riskier because later may arrive with stamp duty, CGT, lender issues and an accountant wearing that expression that says, you really should have called me before signing. Fourth, property investing will still work. Let me say that very clearly. Property's not dead. Growth's not dead. Good residential property's not dead. Established property's not dead. Rent vesting's not dead. But the margin for lazy selection, lazy structuring, lazy cash flow assumptions, and tax-first decision-making has definitely tightened. That's not the end of investing. That's the professionalisation

Starting point is 01:20:37 of investing. And for the top 5% to 10% of investors who were already thinking this way, not much changes at the core. They were already asking, where's the scarcity? Where's the demand? Where are incomes rising? Where's infrastructure landing? Where are supply constrained? Where does owner-occupier emotions support resale values? Where can I hold with confidence for 15 years? This budget does not defeat that strategy. It actually validates it, because when the tax scaffolding around mediocre assets gets pulled back, the real building is easy to see. Now, what about the economy more broadly? Could these changes add to weakness?

Starting point is 01:21:16 Potentially. Not on their own. Let's not overstate that. A recession is not caused by one property tax package. It depends on the wider mix of interest rates, household confidence, inflation, employment, construction activity, government spending, global energy prices, geopolitical shocks,

Starting point is 01:21:33 and whether businesses feel confident enough to invest and hire. But this budget does introduce another layer of caution into a property market that underpins a huge amount of our Aussie's household wealth. If property settlement weakens, if households feel less wealthy, construction activity doesn't respond as hoped, if bank lending slows and if higher rates remain in place, then yes, reforms could contribute to a broader confidence drag. The tax office may collect the cheque, but the economy pays for the behaviour change. And this is why I reject the simplistic idea

Starting point is 01:22:14 that lower property values are automatically a national win. Yes, aspiring buyers want entry to become easier. That matters. But existing homeowners and investors also rely on asset values for confidence, mobility, retirement planning, business borrowing, and their willingness to spend, invest and take risk. You don't create confident investors by promising them weaker asset events.

Starting point is 01:22:40 That's like selling gym memberships by advertising muscle loss. There's a balance and we need to be grown up enough to say that. So here's my blunt view of the property shockwave map. Immediately, fusion, hesitation, an opportunity born from overreaction. Short term, new builds gain attention,

Starting point is 01:23:01 weaker established investor thought builds pressure, quality owner-offer assets remain more resilient. Medium term, buying capacity tightens for some future established property investors, capital shifts, new build premiums may appear and poor tax-driven stock gets exposed. Long term, the tax changes do very little to solve housing affordability on their own and may actually make it worse. Property still works where scarcity and demand remain strong and the investor who adapts to the new game will outperform the investor who keeps arguing with the old school board. And that's where things get really interesting. Because buried inside this budget, behind the headlines, behind the anger, behind

Starting point is 01:23:39 the fairness slogans, is a new post-budget investment sweeps by it. A different type of opportunity. Not blindly new, not blindly established, not blindly residential, not blindly anything. But the part of the market where tax treatment fundamentals, holding power and future demand start lining up more strongly than they did before the budget and that's exactly where we're going to go next because after every major rule change there's one very huge mistake that gets made over and over again people stop thinking about the investment and start chasing the rule they chase the tax break they chase the exemption they chase the loophole they chase the thing that now looks a little shiny because canberra has pointed a spotlight at it

Starting point is 01:24:23 And that's how a sensible policy signal turns into an investor stampede. And a stampede is really a great place to make calm financial decisions unless your goal is to get a hoofprint on your forehead. So let me say the most important thing in this right up front. Don't buy tax. Buy demand. Tax treatment can improve a good investment. It can't rescue a poor one.

Starting point is 01:24:49 Tax can make the numbers sweeter. it can't make a bad location scarce a weak tenant market strong poor property desirable or a fringe estate with endless land suddenly behave like a tightly held blue chip family suburb the investment still has to work before the tax puts on its party hat now in this post budget world likely investor sweet spot does shift but it doesn't shift to one word new That's too simple. The new sweet spot is more like this. Property that's affordable enough for you to hold,

Starting point is 01:25:24 scarce enough to grow, desirable enough to rent, livable enough to resell to emotionally driven owner occupiers, simple enough to finance, robust enough to survive without heavy tax crutches, and positioned in a location where future demand has very good reasons to keep rising. That's the sweet spot. And yes, after this budget, the right qualifying new build

Starting point is 01:25:48 may sit beautifully inside that sweet spot, but not automatically, not by accident, definitely not, because of brochure users' free fonts and the phrase government preferred asset class. Now, regular GetInvested listeners will know I've always been a strong advocate for the right kind of new build. And that's not a new opinion born last Tuesday night because the Treasurer waived the tax bond.

Starting point is 01:26:09 because before COVID made building timeline data as predictable as a Labrador in a butcher shop, I spent years encouraging investors to consider well-selected, well-designed, well-managed new builds for very good reasons. And I'm not talking from the cheap seats here. Before I entered the world of property strategy and finance, I spent around 17 years as an architect and project manager.

Starting point is 01:26:30 So I understand the upside. And I've also seen enough construction war stories to know that a builder's promise of a completed project and sometimes be distant cousins who only make it Christmas time. But done properly, a new bill can offer lower stamp duty because you're only paying duty on land rather than the complete dwelling, full depreciation benefits from day one, lower early maintenance, higher tenant appeal, higher owner-occupier appeal,

Starting point is 01:26:57 better energy efficiency, a cleaner product for the first few years of ownership. And when you select the land well and manage the bill smartly, chance to manufacture equity rather than waiting for the market to do every ounce of the lifting. That's why I've liked good new build strategy for a long time, not because it's tax effective, but because it can be investment effective. The tax benefits are the gravy, not the roast. Now after this budget, that gravy bowl has been refilled because qualifying new residential supply keeps negative gearing against other income and a choice on future capital gains treatment between the old 50% CGT discount and the new indexation plus minimum tax method at

Starting point is 01:27:39 the time of sale. That's very meaningful. That's a genuine strategic advantage. And it means proper new build strategy has just become more important than it already was. But, and you can probably hear the but pulling into the driveway, new building is not a game for the careless. It's not the same process as buying an established house with tenants already mowing the lawn badly. It's a different asset pathway, different risks, different timelines, different due diligence, different cash flow, different finance, different legal contracts, different questions to ask, different professionals that you need around you. It's not simply buying property with an extra slab of concrete. It's like learning a new language, except the grammar is progress

Starting point is 01:28:20 payments, the verbs are variations, and the punctuation marks are usually unexpected invoices. So if you're now wondering, should I pivot toward a new bill? The answer is maybe. Only if the location stacks up, the land's generally scarce or sits in a future scarcity pocket, property will appeal to real tenants and real future homeowners, the bill cost and time is under control, the finished product will be valued by the market, rent works, the timing works, the finance works, and your own holding capacity works. Because you're not buying a tax setting, you're buying a long-term asset. And if the asset's wrong, tax concession is just a ribbon on a sack of potatoes. Now, let's get very specific about the type of new build I think becomes more interesting. I don't mean cookie-cutter, out-of-ring dog boxes

Starting point is 01:29:08 in endless greenfield subdivisions where every fourth house looks like it was copied and pasted by a tired intern, the only shade in the sales office, the only shades of the sales office flag and the nearest cafe is about 17 roundabouts on a servo pie way. That's not automatically supply strategy. and sometimes it's just a tax bait of downlights.

Starting point is 01:29:30 What I do mean is new supply that sits inside genuine demand. For example, well-designed family homes and tightly held owner-occupier areas where new supply is rare, boutique projects and established lifestyle suburbs where downsizers, young professionals and families actually want to live, small-scale infill where the suburb already has amenities, schools, transport, medical services and a real community depth, Dual occupancy or low-density supply additions where planning supports it and the numbers generally stack up,

Starting point is 01:30:02 or selective turnkey builds in growth locations where infrastructure, employment and scarcity combine, rather than relying on hope and a glossy aerial map with future roads drawn in dotted lines. That's very different from blindly chasing you as though the world itself prints money. and here's where the framework I've already used becomes even more valuable. Not because I want to sound like a stuck record but because this budget has made lazy investing more expensive and good frameworks more profitable. So instead of saying where's the tax break you now need to ask where is the demand that will still be here after the tax conversation has moved on. That means looking at the location from the top down. Not postcode first, not property first, not brochure first

Starting point is 01:30:50 but economy first, people first, scarcity first. You want the places where infrastructure is not just promised but meaningfully changing access and desirability. Industries are diverse enough to support jobs, wages and population. Incomes are strong enough to support future price growth. Population growth is real and sustainable. Purchase price power still gives buyers room to move and property supply is genuinely constrained or carefully absorbed

Starting point is 01:31:16 rather than dumped onto the market by the square kilometre. That's my top-down scarcity lens, the three I's, infrastructure, industry, incomes, supported by the three P's of population growth, purchase price power, and property supply or scarcity. Then you move from the broad macro picture, the mid-throw local market, and finally to the micro street asset property and design level. And here's the post-budget twist. That same framework now needs to be applied not just to which established property should I buy, but also to which new build opportunity actually deserves the tax advantage that the budget's

Starting point is 01:31:52 handed out. Because the sweet spot may now be a new property in an established owner-occupied market where scarcity is already evident and demand exists before the tax benefit is even considered. That combination can be very powerful. New tax lane, old demand, future scarcity. That's a much smarter idea than new tax line, new estate, new brochure, old mistake. And if you want help working out whether a new build is right for you, whether it's generally supply adding, whether the numbers stack up, whether the location is scarcely rich or just marketing rich, then that's exactly the kind of conversation we can have in a property mentoring session. Because new build investing done well can be outstanding. Done badly, it can become a very

Starting point is 01:32:37 expensive education degree with gutters. And I'd much rather help you avoid that degree before you actually enroll. Now, does this mean established property is suddenly irrelevant? No, far from it. Established property still has some enormous strengths, particularly where you already own it and enjoy negative year-end grandfathering. It still sits in a high-demand, scarce location. It appeals deeply to owner-occupiers. Its holding cost is manageable without tax cuddle, there's renovation, subdivision, secondary dwelling or redevelopment potential,

Starting point is 01:33:11 or it's simply a quality asset that will be fought over by families in future decades. An established property with genuine scarcity doesn't suddenly lose desirability because the budget rearranges the tax lounge room. But a mediocre established property with weak growth drivers and poor cash flow

Starting point is 01:33:26 that was being held together by tax relief and hope, that one may now need a very different beast and could be in trouble. And this is why the phrase established property is dead is nonsense. That's like saying because petrol prices rose, all cars are useless. No, a bad car becomes more painful. A good car still gets you where you need to go. The question is whether the asset is worth the fuel.

Starting point is 01:33:52 Now, let's widen the lens again because residential property is not the only place capital flow will go to after these changes. For more experienced investors with greater equity, higher borrowing capacity, a strong appetite for complexity and the right team, commercial property may become more interesting. Why? Because commercial property has not been hit by these same residential negative gearing changes. And a well-selected commercial property can offer higher income yields, longer lease terms, tenant funded outgoings in some structures, income stability when the tenant's strong, and in the right asset, genuine capital growth linked to land scarcity,

Starting point is 01:34:27 tenant demand and redevelopment potential but and again we need to say this clearly commercial property is a very different animal it's not residential property wearing a tie it speaks a very different language lease terms tenant commands while yield compression zoning bid outs incentives vacancy risk gst valuations that can change very differently from houses and the price point often needs much more house power, house power, so a much higher price point. Now, this is not where new investors should casually want to be because someone on social media said, commercial's the new resi. That's how people end up owning a half-empty industrial shed beside a tyre recycler and

Starting point is 01:35:09 calling it portfolio diversification. But the right investor with the right advice, commercial property may now sit more prominently on the strategic menu, not for everyone, but more relevant than it was a week ago. And the same applies to other capital flows because when one asset class becomes more complicated and more restricted or less tax-friendly, investors naturally start looking over the fence

Starting point is 01:35:34 to see what the neighbours are doing. So some of you are going to look harder at commercial property, shares, ETS, managed funds, index funds, year-shared portfolio, dual-term rent structures, widely-held trusts, SMF strategies and for the more adventurous or occasionally over-capinated even things like CFDs or crypto. Now let me be very clear here I'm not saying all of those are better and I'm definitely not saying all of those are safer. In fact some of them can move faster than a greyhound with his

Starting point is 01:36:05 tail on fire. But I am saying that post-budget established residential property may now appear to some investors to be more tax constrained, more complicated, less flexible from a yearly cash flow perspective, unless immediately rewarding them did before Tuesday night. Whereas some other asset classes may at first glance be cleaner, simpler, more liquid, or more familiar to investors who don't want to wrestle with quarantine, property losses, new bill definition, valuation dates, and trust tax reach-ups. And that perception matters, because money doesn't just chase returns. It chases clarity, it chases confidence, it chases the path that deals less likely to

Starting point is 01:36:46 require a flowchart, three advisors and a therapeutic map. So yes, some investment capital is likely to shift away from the future, established residential property towards qualifying new builds, commercial property, financial markets and other assets that now appear relatively cleaner under the new regime. But that does not mean residential property builds have faced one of the greatest long-term wealth-building assets. It does mean residential property must now earn its place in the portfolio market. The asset needs to be stronger. Cash writing needs to be better understood. A strategy needs to be sharper. And the reason you're choosing residential property needs to be

Starting point is 01:37:27 more powerful than because that's what everyone used to do. But here's the key warning. Don't jump asset classes because the tax tail wagged you across the road. You still need to understand the asset, risk, liquidity, tax, finance, income, and exit, and your own sleep at night bank. A confused investor moving too quickly from one asset to another is adapting their financially ricochet. Now, let's touch briefly on ownership structure, because the new world also makes the ownership question more important.

Starting point is 01:38:03 For years, many investors have deported to personal names, joint names, and it's in common where one partner earned more, or discretionary trusts where flexibility or borrowing strategy would be more practical. But after this budget, some of those default pathways need to be seen. Not because one structure suddenly means for everyone, there's no unit of support.

Starting point is 01:38:21 Because the tax treatment of discretionary trusts, future gains, negative giving, new builds, commercial property and superannuation structures has now moved further apart. So the question is no longer simply who's name should we put it in or buy it in, It's what ownership structure best suits the asset type, the lending strategy, the tax outcome,

Starting point is 01:38:40 the protection needs, the family plan, and the eventual exit. That's a far more important conversation than it was before the budget. And it's precisely the sort of conversation that needs a... ..and a strategy to understand the investment position that accordingly gets chosen by HALA.

Starting point is 01:39:01 Because if ownership structure could always... but not drive a wildly night of investment following with its spear in the air. So if I had to summarise the news please spot in one

Starting point is 01:39:11 eye, it's post-budget with an R it's not simply the cheapest property in the nearest property

Starting point is 01:39:16 or the most tax-effective property. It's the property or assets property that can hold comfortably, grow

Starting point is 01:39:24 collectively, finance sensibly, structure properly and exercise it. That's the new game. Truthfully,

Starting point is 01:39:33 that was always of life. This budget has just made it more obvious, displaying it, who was merely shaking tax deduction like it still happens today. And now, to make all of this possible, more than ever possible, that policy land was placed quite on it. It's on the table. That's going to be today in the mail. Because for them, this is not a budget headline. It's a big thing in the year-round in world precision. And the difference between the established bought them by a new vendor, joining an old taxier with a new one,

Starting point is 01:40:04 could be hundreds of thousands of dollars a month. So let's make all this real. Because if we stay in policy land, the plane will eventually walk out of the morning and leave you but on a novel flight. So that's what's going to happen. That's what's going to happen. With a couple of ongoing data.

Starting point is 01:40:26 David Mellon, the mid-40s. He is, once they're promised full, once they're able to ask for the brand name sneakers, we're going to negotiate it's still a commercial indicator. And Mel earns about $180,000 a year. Dave earns about $80,000 part time and takes on more than school arms, school pickups, got the importance of the data. Our sole business is never a clear place to keep the fact about life. They own their own home, got a mortgage.

Starting point is 01:40:54 They're not bloated. but they're not rolling around in the colds of spare cash like a car down the road they work hard, they're safe they've gone without and like many of them they've reached that point

Starting point is 01:41:08 where they're asking how do we build a future that doesn't rely on wages because Dave and Mel don't want to retire into financial adulthood they want options they want time they want to help their kids

Starting point is 01:41:22 about becoming their kids' future financial plan. And that would rather sell folks and actually put it on the state's reasonable hand than spend their late years filling out forms of government and certain statements. In other words, they're exactly the kind of Australians essentially that you should want to encourage.

Starting point is 01:41:41 So David and Mel are considering their next investment in England. Let's say they're looking at $750,000 for the period of time, which is either established property or a qualifying turn in new growth vocation when the financial system is set up. And we're going to use this one simple example

Starting point is 01:42:01 to show you why the close budget choice between established home and qualified, the new supplier, has now become far more strategic than possibly. So let's paint that. Property costs are limited. It earns around about a 4.3% gross revenue. So it's rates roughly $23,000 a year,

Starting point is 01:42:23 or about $600,000 in the budget. They even meld fund direct investment in the way that most investors do. They borrow 80% against the property interest on the investment line. That's better sense of the word. Then they fund the way it may in the 20th century, all plus and minus, you should have lost.

Starting point is 01:42:40 From a dedicated investment equity fund that's secured against their own. That's that point. So in simple terms, or effectively 100% get funded for the property of purchase and the like. Now, that's not a neutral address when it comes to the system at home,

Starting point is 01:43:00 as I said. It does mean that the cash flow in and out does highly leverage property investment. However, if it only did all the that the bank account related to the stress of animal rights, then it would be similar. Now, let's assume that this property grows on an average of 6.8% per annum. Please imagine that roughly an average capital growth has been.

Starting point is 01:43:25 Now, that's not a guarantee. It's not a promise. It's simply an illustrative long-term growth assumption. At that rate, 7.5% per annum is just over $2 million. So Dave and Mel, the normal amount of time, roughly 1.2 cents a day, of course, because that's why the bookings are so expensive, not because they enjoy hearing books, they don't have a plumbing issue or something, they pay best because over time, they've also laid the asset, the company owners are selling it, so many are going to change and need to

Starting point is 01:44:06 So that $1.2 million account loan is a reasonable risk, and this factor changes the way that future gains are going to be taxed. So let's start with the old rule. Under the old 50% CGT discount system, the agent may or may not qualify for the broader expense of about half of that $1.2 million that the agent has been accounted for as taxable. So the taxable amount would be roughly $631,000. For other adjustments, we lost the basis of the sale, we lost the ownership of Lexington under the basis of the sale, and we're delighted to find this.

Starting point is 01:44:42 That is a simple plain word picture, and one that went to the central bank, and it's roughly $631,000. That's the new world investors have been planning. Now let's compare the new indexation approach. However, indexation adjusts the original purchase price per inflation, then taxes the real gain up above that. So if Dave and Mel buy for 750 grand and inflation averages about 2.65% over 15 years, then their index cost base would rise to roughly 1.11 million.

Starting point is 01:45:20 So their future sale value is still just over 2 million. So their index gain becomes roughly 902,000. So in plain English, instead of about 631 being exposed to capstone, the old 50% CGT discount approach, about 902,000 may be exposed under the indexation approach. Before we even get to the new 30% minimum cash flow and the exact mechanics, they still need full professional interpretation.

Starting point is 01:45:51 So under this strong growth, moderate inflation in town indexation materially worse than the old 50 discount that's the headline growth beats inflation for a lot and more of the gain becomes taxable now let's change one ingredient what if inflation averages four percent over that same 15 period and inflation at the moment's higher than that then dave and mill's 750 000 purchase price would index up to roughly 1.35 million so that sale value is still about the stover tuning bar so the index gain becomes roughly 661 000 now compare the under the old big percent sector discount there was about 631 taxable gain but under the new indexation with the 2.65 percent inflation about 902 000

Starting point is 01:46:47 of taxable gain, so roughly $270 more is taxable than the old CGT discount. In order to get new indexation with 4% deflation, about $661 taxable gain, which is roughly $30 grand more taxable than the old CGT discount. That's the clean, simplified bottom line lesson. When inflation is higher, indexation protects more of the gain. If property growth strongly outpaces inflation, then the old 5% discount may have been far more generous. and if inflation is high enough long enough indexation can end up close to the old discount

Starting point is 01:47:23 outcome or in some situations potentially better but in the sort of high quality high growth residential property strategy many investors are actually tying up a shoe the new cdt world may leave a meaningfully larger slice of gain standing in the tax queue that's the simple takeaway not indexation bad, not indexation good, but the better your property performs above inflation, the more closely you need to model the new CTT outcome. That's the investor clue. Now remember, for qualifying new residential builds, Dave and Mel may still be able to choose between

Starting point is 01:48:03 the old CTT 16 and the new indexation method when they eventually sell. That choice would be very valuable because if the new-build property grows strongly and inflation stays moderate, old 50% discount may remain the better option. But if inflation runs hot for a long period, indexation method may become more competitive. Either way, choice is valuable. Optionality is valuable and the budget has deliberately given more optionality in qualifying new-build investors than it has for future buyers of established property. That's not an excellent that's the policy desire. Now let's look at cash flow because CGT is what happens at the end.

Starting point is 01:48:48 Holding costs, what we feel every week on the way here. And for Dave and Mel, this is where the difference between established property and a qualified new build can become very real very quickly. So let's keep the holding cost picture simple. Property earns about 32,000 total 50-year year-round. Let's say, just for illustration, that Dave and Mel's annual interest bill and normal outgoings together come to around $56,750. That could include interest on the loan, property management, weights, insurance, maintenance, and other ordinary holding costs. Again, illustrative owned, not a personal cash flow forecast, but it gives us a clean picture. so income's about $32,250, total annual costs are about $56,750, the annual shortfall is about

Starting point is 01:49:40 $24,500. That's around $470 a week before tax. Under the old name, doing reals, it mailed the property in the structure that allowed her to use that loss against her income and given she's on a by a marginal tax rate, the tax benefit might soften that holding shortfall by roughly $220 a week in this simple example. So instead of feeling like a $470 a week up, that's a burden, the out-of-pocket holding cost might land close to $250 a week.

Starting point is 01:50:15 Again, numbers vary, tax position varies, structure varies, and appreciation varies, but the shape of the picture is what matters. Now, if data mill by a post-budget established property that falls under the new quarantine rules during the 1st of July, 2027, that annual loss can no longer reduce mill salary

Starting point is 01:50:33 and salary tax in the same way. The loss may be carried forward and used later against residential property income or residential income gains. But the deduction hasn't necessarily been vaporised, but the cash flow relief this year is gone missing, which means their real weekly holding costs could stay much closer to the full $470 a week

Starting point is 01:50:55 rather than being softened down towards the $250 a month. In that sort of holiday gift example, the immediate weekly holiday cost can come close to doubling. Now, freedom fighters is not a tax book, no. That's the difference between this is manageable with discipline

Starting point is 01:51:14 and why does my investment problem feel like it's taken off smoking and it keeps asking for money? Now compare that with a qualifying new build. If the property qualifies for the new build negative year and carve out, Dave and Mel may continue to use those rental losses against other income subject to their personal circumstances and the final law. So in our very simplified illustration, the new build could still receive that tax supported holding cost relief while the future established property purchase doesn't. And that's why after this

Starting point is 01:51:47 budget, the gap between established and qualifying new is not merely a tax office technicality. It may affect how much you can borrow, how much you can comfortably hold, whether you can buy a second asset, whether your strategy stalls at one property, and whether the numbers still let you sleep at night. Now, if David Mill was sitting across from me today, I wouldn't say only buy new, that'd be far too simplistic. I'd say let's compare the strategic pathways. Path one, a post-budget established property, potentially strong scarcity, great location, excellent owner-occupier appeal, but lower annual tax support, more cash flow strain, future CGT under the new system and a greater need for a strong income, buffers and holding power.

Starting point is 01:52:37 Path two, a qualifying new build strategy. Potentially negatively gearing retained, more CGT optionality, lower early maintenance, depreciation support and a stronger post-budget tax position. But more build risk, more timing risk, more process complexity and a much greater need for the right specialist team because buying a good new build is not simply shopping for a house. It's assembling a small orchestra.

Starting point is 01:53:09 You need the right plan selection, design, builder, contracts, finance timing, valuation understanding, project discipline and someone to tell you when the great deal is actually a great pile of future variations wearing a sales tie. So for Dave and Mel, the real question isn't which property has the best tax deduction it's which strategy gives us the best risk adjusted after tax after holding cost long-term wealth outcome. That's the grown-up question and after this budget that question matters more than ever. For Dave and Mel this isn't tax theory it's whether the asset helps

Starting point is 01:53:50 fund retirement or becomes a very expensive pet rock with council rates. It's whether their investment plan keeps compounding with confidence or starts leaking cash like a bucket with a polite smile and a ministerial briefing note. It's whether they buy the right opportunity for the new environment or keep using an old map after Canberra has moved half the roads. And this is why I keep saying property investing is not dead but the pathway's changed. The gap between average and excellent strategy just got a lot wider. The value of specialist advice just increased and the investor who understands cash flow, tax timing, entity choice, new build feasibility, scarcity, growth and holding power will make very different decisions from the investor who just asks,

Starting point is 01:54:38 where do I get the biggest deduction? So if Dave and Mel were sitting across from me today before they signed a single contract, I'd want them to slow down, map the new rules, compare established versus qualifying new supply, model the holding costs, model the exit outcomes, Review entity ownership with their accountant. Confirm borrowing capacity with a skilled broker. And only then decide where their next 15-year wealth move should actually go. And that, Friend and Fighters, is exactly the mindset we now need to turn into a practical post-budget investor playbook.

Starting point is 01:55:18 Because whether you're Dave and Mel, Greg and Julie, Nat and Rowett, Liam and Sophie or somewhere between all of those the new question is not is property investing over it's what now needs to change in my strategy so I still will in the new game and that's where we go next because after a rule change like this the worst thing you can do is sit frozen in the headlights or worse run blindly toward whatever the property marketing machine starts shouting loudest next week. This is not the moment for panic. It's the moment for recalibration. Because the budget hasn't removed the wealth-building power of property. It's changed the order of importance. Before this budget, too many investors started with,

Starting point is 01:56:06 how much can I borrow? Then what tax deductions do I get? And only after that, is this actually a quality asset? That sequence was already dangerous. Now it's financially reckless. The new game is much clearer. You start with strategy, then holding power, then asset quality, then structure, then finance, then tax treatment. Tax matters, but it sits inside the strategy. It's not the strategy itself. A tax deduction is a dessert spoon. Useful at the table, completely unhelpful if you're trying to dig the foundations of your future with it. So let's build the new playbook in two parts. First, what existing investors need to do.

Starting point is 01:56:51 And second, what aspiring and new investors need to do. Then we'll come to the big structural issue. Who should own the asset in the new world? Because after this budget, ownership structure is no longer administrative housekeeping. It's strategic architecture. so if you already own investment property your job is not to panic your job is to map you need a clear picture of exactly what you own when you bought it how it's held how it's financed how it performs and how the new tax world may interact with your future plans so here's the

Starting point is 01:57:30 existing investor post-budget playbook first map every asset by acquisition date this matters because Budget Night created a line in the sand. If you held an established residential investment property before 7.30pm on the 12th of May, 2026, your negative gearing treatment is protected for that property until disposable. If you acquired an established residential property after that time,

Starting point is 01:57:56 the future negative gearing treatment is different from the 1st of July, 2027. So don't operate from memory. Don't assume. Don't say, was that the one that we exchanged on the Tuesday or the Thursday? Go and find out. Contract dates, exchange dates, settlement dates, entity names, loan accounts. Make yourself a clean asset map because in the new world, details matter a lot. Second, understand your grandfathering position.

Starting point is 01:58:25 Now remember, grandfathering is not one single answer across every tax measure anymore. For negative gearing, many existing investors are strongly protected. For CGT, they're only partly protected. Past capital growth up to the 1st of July 2027 stays in the old world. Future growth after that date moves into the new world. So if you own a good growth asset and you plan to hold it for another decade, the new CGT setting still matters. That doesn't mean you sell, it means you model.

Starting point is 01:58:58 because the difference between keep holding, refinance instead of sell, sell one asset later to reduce debt or pass an asset into retirement planning may now shift at the margins and in long-term investing, margins compound. Third, prepare for the 1st of July 2027 valuation strategy. The budget says existing assets sold after the 1st of July 2027 will need their pre-change and post-change gains separated using a permitted method such as a valuation or what's called apportionment.

Starting point is 01:59:34 That means records are going to become your best friend, not your glamorous friend, more like the quiet friend who brings jumper leads when your battery dies, but still extremely useful. So you're going to want to talk with your accountant about whether valuation at 1 July 27 may matter for your assets what records you should retain, what evidence will likely be needed and what preparation you

Starting point is 01:59:59 should do well before the date arrives. Because trying to reconstruct a 2027 property value in 2038 from memory, a faded real estate flyer and a screenshot from a group chat is not a robust tax strategy. Fourth, review the quality of what you already hold. This budget is a good excuse to ask a question you should ask periodically anyway. Would I buy this property again today if I didn't already own it? That question can be confronting because sometimes we become emotionally attached to assets simply because we've owned them for a while. Like an old garden furniture that we keep moving from house to house even though one chair has been threatened to collapse since the Howard era. So look honestly at each property. Is it in a quality location? Does it have owner-occupier

Starting point is 02:00:54 appeal? Is future demand still strong? Are the growth drivers intact? Is the rent competitive? Are holding costs manageable? Is land tax eating alive? Is insurance becoming ugly? Is maintenance starting to resemble a subscription service? Is it a genuine long-term asset or has tax seasoning being disguising a very mediocre meal. Because if you own a great property, the budget doesn't mean you should sell it. But if you own a poor property, the budget may accelerate a review you should already have been having. Fifth, review your debt and holding power. Now this is vital because the new budget has reminded every investor of something that should never be forgotten. You only benefit from long-term growth if you can afford to hold that asset long enough to receive

Starting point is 02:01:44 it. So revisit loan type, interest rate, fixed versus variable exposure, offset balances, repayment structure, cash buffers, wage resilience, vacancy allowance, rate rise tolerance, and the actual after-tax holding cost under the new rules if any future moves are being contemplated. If you have a portfolio that only works when rates fall, rates rise, nothing breaks, and your tax refund arrives with perfect punctuality, then you don't have a portfolio. You've got a hostage negotiation. Six, don't panic sell. And let me say this very clearly. Selling is a strategy. Panicking is not. The budget may change the way that you review the asset. It may change the way you model future sale timing. It may change the value of holding grandfathered positions,

Starting point is 02:02:38 but the mere existence of a tax change is not by itself a reason to sell. You've got to weigh in future growth, future cash flow, future tax, selling costs, replacement options, stamp duty on re-entry, borrowing ability, retirement timing and emotional consequences. Because selling a good long-term asset to avoid a future tax concern that you haven't properly modelled can be a bit like selling your umbrella just because you heard there might be rain. Now let's turn to those of you who were planning to invest next or invest for the first time. I want to be especially clear with you here. This budget hasn't killed your opportunity but it has made your first move much more important. The cost of buying the wrong asset and the wrong structure with the wrong debt

Starting point is 02:03:27 just went up. So your job isn't to retreat, it's to get better. So first, recheck your borrowing capacity. Do this before you fall in love with the property, not after. Not once you've mentally arranged your future tenant's furniture in the lounge room, but before. Because borrowing capacity for future established property investors may be affected if lenders reduce the way they recognise tax benefits from negative gearing and servicing calculations. Now we don't know yet how every lender is going to respond but it is a live issue and if you're buying near your capacity ceiling even a relatively modest serviceability change can shift your price point, your deposit needs, your LVR, your structure and your timing. So get

Starting point is 02:04:13 a fresh finance read and not from a call centre script, from a broker who understands investment lending, multiple properties, cash flow modelling and post-budget policy consequences. Second, stop relying on tax refunds as the hold strategy. Tax relief may still matter in some circumstances, especially for qualifying new builds. But the era of saying, it's fine if a property loses heaps each week because I'm just going to get a chunky refund, that's just become far less comfortable for established property bought after budget night. so you need to ask can I hold this without the refund? How much margin do I have if rates rise? What happens if rent grows a lot slower than expected? What happens if the property sits

Starting point is 02:05:00 vacant for four weeks? What happens if insurance continues to jump? What happens if Dave breaks his ankle and Mel takes three months off to keep the circus running? Not because you should be afraid, because you should be durable and there's a big difference. Fear freezes, durability property prepares. Third, compare new build versus established on the whole game, not just tax. After this budget, that comparison matters more. You need to compare entry costs, stamp duty, build risk, holding costs, tax treatment, depreciation, rental demand, capital growth, resale appeal, land component, location scarcity, finance complexity, and exit flexibility. A good established property can still beat a bad new build.

Starting point is 02:05:48 A great new build may now beat a merely good established property for some investors because of the tax and holding cost edge. But you won't know until you model the actual pathways. So don't assume, don't outsource your brain to a brochure, and definitely don't let a vested interest seller convince you that budget advantage means due diligence optional. Fourth, get entity advice before you sign, not after. This is one of the biggest post-budget shifts. The way you own an asset may become more strategically important than ever now. So if you're buying fresh, you need the ownership conversation up front.

Starting point is 02:06:29 Is it personal names, joint ownership, tenants in common, discretionary trust, fixed trust, company, self-managed super, or some combination? There's no one-size-fits-all answer here. And anyone who gives you a blanker recommendation without first understanding your income, your spouse's income, your current assets, your debt, your family structure, your business risk, your estate plan, your retirement horizon and your borrowing strategy, they're not giving advice. They're throwing darts while wearing oven mitts. So let's explore ownership structures in plain English and unpack them a little more because this budget has made entity selection a much hotter topic. and I know this part can become absolutely mind-numbing very quickly so let's keep it human starting with joint ownership now you probably know what this means but it's simply about you

Starting point is 02:07:22 and another person owning a property together often spouses how much each owns can vary depending on the structure it might be 50 50 or in some cases held as tenants in common with different percentages and that can matter where one spouse has much higher income than the other but again In the new tax world, you need advice on whether the ownership split still serves the biggest strategy. Because an old trick used automatically in a new environment can become a vintage mistake. Next, discretionary trusts. This is what many people call a family trust. The trustee controls the trust. The beneficiaries may receive distributions at the trustee's discretion. It can provide flexibility in how income is distributed within the rules.

Starting point is 02:08:07 It can help with asset protection in some contexts. It can support family wealth planning. But from the 1st of July, 2028, the government's announced a 30% minimum tax on discretionary trusts with some exceptions. That means ordinary family trusts used for investment and income distribution may no longer deliver the same tax flexibility that they once did.

Starting point is 02:08:31 And this is why who owns property or other assets through a discretionary trust needs to start a proper review process. Not panic, but review. Next are fixed trusts. Now a fixed trust is different. Instead of the trustee deciding each year who gets what, the beneficiaries have fixed entitlements. Think of it like fixed slices of a pie. You own your slice. The size of the slice doesn't change in a whim. Fixed trusts can be more certain for some tax and ownership purposes but less flexible than discretionary trusts. And the budget indicates that fixed trusts are outside the new discretionary trust minimum tax measure. The exact treatment still needs to be checked against final law and your

Starting point is 02:09:16 circumstances but the direction here is clear. Then comes what's called a widely held trust. Now this phrase sounds like the sort of thing that only tax lawyers talk about before lunch. But the basic idea isn't too scary. A widely held trust generally refers to a trust with many unrelated investors, more like a managed fund, pooled investment vehicle, or a listed trust. Not mum, dad, two kids, the family dog, and an investment property in Toowoomba. The budget indicates widely held trusts sit outside the discretionary trust minimum tax hit. For the average mum and dad property investor,

Starting point is 02:09:56 this is not likely to be a structure that they're already using for direct residential property but it matters because it helps explain where institutional or pooled capital may retain advantages that ordinary family trusts don't. Then comes complying super funds. Now this includes properly regulated superannuation funds including self-money super funds that comply with super law. Superannuation already operates under its own tax framework and the budget indicates complying super funds are not caught by the discretionary trust minimum tax measure. Now, that doesn't mean everyone should rush to buy property in super.

Starting point is 02:10:35 Please, don't hear that. Self-managed super property investing has its own borrowing limits, liquidity issues, compliance obligations, related party restrictions, cash flow requirements and retirement strategy considerations. It can be a very powerful mechanism for the right person in the right situation. But it can also be a beautifully wrapped compliance grenade for the wrong one. So again, advice, specific advice, not internet enthusiasm.

Starting point is 02:11:08 Then there's testamentary trusts. And this is a trust created through a will after someone dies. It's often used in estate planning to hold inherited assets for beneficiaries. Now, the budget materials and early summaries indicate that certain testamentary trust assets already existing at an announcement may receive special treatment within the trust reform package. But this is exactly the sort of detail that needs draft law confirmation before anyone starts celebrating or panicking. So, if you're in that situation, don't guess. Put it on your accountant and your estate lawyer review list. Now, let's explore the trust change in simple human language. What does the 30% discretionary trust minimum tax actually mean?

Starting point is 02:11:52 Well, very simply, the government is trying to stop trusts being used to push income into lower tax places and reduce the overall tax bill below 30%. So, from the 1st of July, 2028, the trust itself is intended to pay a minimum tax of 30% on taxable income, subject to the final rules and exemptions. Now, the budget's design also says that non-corporate beneficiaries will receive credits for tax paid by the trustee. Or, in normal language, if the trust has already paid some tax on income and you personally later include that income in your tax return, the system is intended to recognise that tax that's already been paid so you're not simply taxed twice without relief.

Starting point is 02:12:37 but corporate beneficiaries like companies don't receive those credits under the announced design why because the government specifically wants to stop income being routed through so-called bucket companies to get a lower effective tax rate that's the policy intent but the details still need legislation now if that's made your eyes water a little fair enough tax trust rules can make even very intelligent people briefly forget why they even entered the room. But the practical takeaway for investors is simple here. If you use that discretionary trust, you need a review. Not necessarily a restructure, a review. Because the old answer may still be right, or it may be not. And you need to know which way you're going to go before the 1st of July 2028

Starting point is 02:13:30 starts looming like a dark cloud over your tax planning day. Now, let's dig into what the budget refers to when it talks about rollover relief. You may have heard that expression because it comes up a lot. So let's deal with that phrase because rollover relief sounds gentle, like a yoga instructor for companies. But what does it actually mean? Well, broadly, the government says it's going to provide three years of rollover relief from the 1st of July 2027 to assist small businesses and others that may wish to restructure

Starting point is 02:14:02 out of discretionary trusts. So in plain English the government is signalling that certain taxpayers may get a temporary pathway to move assets from one structure to another without immediately treating the full federal tax consequences that would normally make restructuring very expensive. that's the broad intent but and this is a giant flashing neon but rollover relief does not mean free restructure it does not automatically mean no stamp duty no legal costs no lender consent no refinancing no cgt consequences in every situation no change to asset protection no land tax change no loss of borrowing flexibility and no complexity the budget has announced the concept. The draft legislation will tell us the real operating manual and until that manual arrives

Starting point is 02:14:56 anyone telling you to rush out and restructure your trust immediately is giving advice with the confidence of a man or someone who's not yet read the instructions but's already thrown away the box. So please if you have a discretionary trust holding investments, property, business assets or meaningful family wealth you should absolutely start the conversation with your accountant and lawyer, but don't make a structural change because of a headline. Restructure only when the tax consequences, the legal consequences, the stamp duty position, the lending consequences, the asset protection implications, the estate planning effects, and the long-term strategy are all lined up. Because otherwise, you may solve one tax problem and accidentally buy yourself

Starting point is 02:15:41 three new ones wearing steel cap boats and that brings me to another important point this budget will separate real professionals from polished sales funnels very quickly the days are saying just buy this established rental in a booming interstate suburb put it in a trust uses this lender and rinse and repeat have become a lot more dangerous they always were but a lot more now the new environment requires real macro analysis real location selection real cash flow work real tax coordination, real finance strategy, real entity thinking, and real local due diligence. That means good professionals become more valuable. Independent strategists, accountants who understand property, brokers who understand portfolios, lawyers who understand structures,

Starting point is 02:16:30 local specialists who know the actual streets, not just vacancy rates printed on a slide. And yes, good buyers agents who are genuinely client first will still be useful. Perhaps even more useful, actually. But the pressure-driven, podcast-flame, high-volume, hotspot-now-act-fast-everyone's-buying-the-same-suburb model, that may be about to do a Herald Halt or an exit stage left. Because when tax is less forgiving, poor advice gets exposed faster. And frankly, that's not actually a bad thing.

Starting point is 02:17:04 So here's the new investor playbook in one breath. if you already own property map it understand your grandfathering prepare for cgt transition planning review asset quality review debt and holding power and don't panic sell if you want to invest next recheck your borrowing capacity stress test without assuming easy tax relief compare established and qualifying you on the whole strategy get entity advice before signing and by demand, not deductions. If you use trusts, review now, understand what structure you actually have,

Starting point is 02:17:40 start preparing for 1st of July, 2028, but don't restructure blindly until the rules and the full cost benefit picture are crystal clear. That's the new game. Not easy, but very learnable. And for investors prepared to do the homework, it may actually create better decision-making

Starting point is 02:17:57 than the old environment did because when tax shortcuts narrow, strategy gets a proper seat at the table again but of course knowing the playbook is one thing knowing what to do this weekend are the next 30 days before the 1st of July 2027 and before the 1st of July 2028 is another all together so let's turn all of this into a simple post-budget action plan not fear not frenzy but a plan so here it is your Saturday morning post-budget playbook because by the time you're hearing this, budget night is no longer a rumour.

Starting point is 02:18:33 The headline dust has already started to settle. The outrage machine has had a few days to overheat and you need now to separate what deserves an emotional reaction from what deserves a strategic response because those are definitely not the same thing. And the most important starting point is this. Don't make a 15-year decision in a 15-minute panic. So that again to yourself, say that again to yourself

Starting point is 02:19:02 before you then actually sell something, buy something, restructure something, call your accountant with the urgency of a person whose dishwasher has just started smoking or jump headfirst on a new bill brochure because someone on LinkedIn used the words, once in a generation tax window. This is not the time for financial flinching. It's the time for calm triage. So first, what should you do this weekend?

Starting point is 02:19:28 Not next financial year, not after lunch with your accountant in August, but this weekend. And let me keep it simple. One, gather your facts, because good decisions need clean inputs. If you already own investment property, create a one-page summary of each asset. You want property address, purchase date, contract exchange date, settlement date, ownership entity, original purchase price, current estimated value, loan balances, interest rates, loan types, annual rent, annual holding costs and whether the property is established, new or part of a more complicated structure. Nothing fancy, you're not preparing

Starting point is 02:20:05 for a Senate inquiry, you're simply putting your own financial house in order because the phrase I'm pretty sure we bought that one before the cut-off is not going to soothe you when tax planning gets real. Secondly, identify which budget lane each asset actually sits in. For every property you own or are considering, ask, is this an existing grandfathered established property? Is this a future established property purchased subject to the new rules? Is this a qualifying new build? Is it held personally, jointly in a trust, in super or through a company? Because before you ask, what should I do? You need to know what exactly am I dealing with? Otherwise, you're trying to diagnose a car problem from the passenger seat while the radio's turned

Starting point is 02:20:50 up. Thirdly, write down your questions. Not one panicked all-purpose question like, hell, what does the budget mean? That's not a question, that's a fog bank. Write down specific questions for your accountant, broker and your property strategist. Things like, does my existing property remain fully protected for negative gearing? How might the CGT transition affect a sale 10 years from now? Should I be considering a valuation at or around the 1st of July 2027? If I buy again, how does established compare with qualifying new supply? Does my current trust still make sense after the announced 30% minimum tax? What happens to my buying capacity if lenders change their servicing treatment?

Starting point is 02:21:35 Because good questions are like torches. They don't remove the forest, but they stop you walking into a tree. Fourth, don't panic sell. I'll say this again because this really matters. Don't make an irreversible decision just because the headlines decided to wear a siren on its head. If your property was a good asset last week, it hasn't magically turned into a pumpkin because of the budget speech. The tax position may have shifted. The strategic review may now be necessary.

Starting point is 02:22:07 But selling should come way after modelling, not before comprehension. Then what should you do over the next 30 days or a month or so? This is where the proper review work actually begins. So first, speak with your accountant. Not necessarily to make a big decision immediately, but to understand how the announced CGT transition may affect your existing assets, whether valuation planning is likely to matter,

Starting point is 02:22:35 whether your future sales strategy needs revisiting, how carry forward losses may work for future established purchases, and whether your ownership entities need review. Again, draft legislation still matters here, but the conversation should start now, especially if you own assets in trust, or if your retirement plan involves selling property after the 1st of July 2027. Second, speak with a broker who actually understands investment finance, because the budget has changed not just tax mechanics, but very likely future buying strategy. If you're planning to invest again, you need to know what you can buy today, what may change if lenders alter negative gearing treatment in their calculators, whether a qualifying new build improves your holding cost profile, and whether your current loan structure supports your next move or quietly restricts it. The wrong debt structure can turn a good property strategy into a treadmill with loose wiring.

Starting point is 02:23:34 So get clarity. Third, speak with an independent property strategist. And yes, someone like me or another genuine specialist who's not attached to a builder, a project marketer, a buyer's agent stock pipeline, or a business model that mysteriously concludes that you should buy whatever they happen to be selling that week. because after this budget the decision between existing versus new, residential versus commercial, personal names versus another structure, growth versus holding cost and buy now versus wait and watch has become much more nuanced and nuance is where bad advice gets very expensive. Fourth, stress test your current and next investment. If you already own property ask can I hold this if rates remain high for longer? What if insurance continues to rise? What if the

Starting point is 02:24:27 rent doesn't grow as quickly as hoped? What if I need to refinance or can't refinance? What if I hold for 10 more years under the new CGT world? If you're buying next, ask can this asset stand on its own feet without a tax fund carrying it like a Thai parent at the end of the Royal Show. Would I still want to own this if the tax benefit was smaller than expected? That question alone will save a lot of people from a lot of future regret. Next, what should you prepare before the 1st of July 2027? That date now sits like a bright line on the investor calendar. And there are three main things to think about here. 1. CGT Valuation and Record Preparation

Starting point is 02:25:15 If you own investment assets that may be sold after the 1st of July 2027, you need professional advice about whether a valuation strategy around that date is appropriate. Not every person will need the same approach, but every serious investor should understand the issue. Because future gains will need to be split between the old world and the new world. and the clearer your records, the less likely you are to be arguing with the future from a position of poor reverence. 2. Decide whether your next investment move still belongs in established property, qualifying new property or something else entirely. Don't sleepwalk into old strategies under new rules.

Starting point is 02:25:57 If you are planning to buy established residential property, pause and compare. If you are already considering new build, reassess what the budget advantage properly factored in. If you are nearing your borrowing limit, consider whether a different asset class, a different price point or a more balanced growth plus holding cost strategy makes more sense. This is not a one size fits all buy new message. It's a reassess before repeating the old play message. Three, rebuild your strategy around holding power. because this budget has reminded us that the ability to hold an asset through time

Starting point is 02:26:34 is more important than ever. A good property that you can't hold is a bad strategy. A slightly lower growth asset that you can hold comfortably may ultimately produce a better real-world outcome than a trophy property that makes your cash flow feel like a hostage video. So before the 1st of July, 2027,

Starting point is 02:26:58 Investors should be building buffers, rechecking cash flow, updating borrowing capacity, reviewing PAYG, withholding tax variations where they're still relevant and making sure their strategy is built for the new environment,

Starting point is 02:27:10 not last year's rule book. And finally, what should trust users be thinking about before the 1st of July, 2028? If you hold property, business assets or investments inside a discretionary trust,

Starting point is 02:27:24 you should not leave this until the week before the new minimum tax is due to begin. That would be like deciding to review your roof after the storm has already moved into your lounge room. My view, you'll want the serious review well underway at least three to six months before the 1st of July 2028 and possibly earlier if your structure is complex. Why? Because the announced three-year rollover relief from the 1st of July 2027 may give some people a pathway to restructure out of discretionary trust. But as we said earlier, that doesn't automatically mean restructuring is painless.

Starting point is 02:27:59 You still need to model stamp duty, capital gains, tax where relevant, refinance consequences, loan discharge or redocumentation issues, asset protection impacts, estate planning changes, company tax treatment and whether the proposed destination structure is actually better for your future. Rollover relief may oil the hinges. It doesn't remove the door. And it certainly doesn't guarantee that you need to walk through it. So the action plan's not complicated, it's disciplined.

Starting point is 02:28:28 So this weekend, gather your facts, identify your budget lane, write down your real questions, and don't panic sell. Over the next month or so, speak with your accountant, your investment-savvy mortgage broker, an independent property strategist, then stress test your portfolio and your next move. Before the 1st of July, 2027, prepare for CGT transition issues, reassess your next property path and rebuild your strategy around holding power. Before the 1st of July 2028, if you use a discretionary trust, get proper legal and

Starting point is 02:29:01 tax advice well ahead of time and don't restructure until the full cost-benefit picture is crystal clear. Because the people who get into trouble after big rule changes are usually not the people who had no warning. They're the people who had the warning but confused being busy with being prepared. Don't be that investor. Take a breath, get clear, get advice, then act with purpose. Because next, I want to cover the quickfire questions I know many of you are still yelling at your phone, your car stereo, or the poor dog who didn't ask to become your budget sounding board. So let's do it. A post-budget bushfire ambush. Rapid fire answers to the big questions that many investors, buyers, renters and homeowners are now asking.

Starting point is 02:29:49 No waffle, no policy fog, just the straight Bushy-style translation. So question one, are existing investors safe? Well, the honest answer is safer than many feared, but not untouched. If you already owned an established residential investment property before budget night, your negative gearing treatment is broadly preserved until you sell it. And that's a meaningful protection. but on CGT future gains after the 1st of July 2027 move into the new regime so whether this

Starting point is 02:30:21 matters a lot or only a little depends on how long you've already held the property how much growth has already occurred how much more growth you expect after the 1st of July 2027 when you may sell and whether it's actually a good asset worth continuing to hold because grandfathering can protect the tax treatment, but it can't turn a dud property into a champion. You can sprinkle hundreds and thousands on doggy do, but underneath it still smells and tastes like doggy do. So yes, existing investors have been partly protected, but that protection is not a reason to stop thinking. It's a reason to review more carefully. Question two, should I sell before the 1st July 2027. Well, not because of a headline, not because someone on social media

Starting point is 02:31:09 posted a red arrow on a siren emoji, and not because your neighbour's accountant reckons everyone's going to sell. You sell only after comparing future growth potential, future cash flow, new CGD treatment, selling costs, agent fees, possible stamp duty if you're reimbursed, replacement asset options, your debt position, your retirement timeline, and what you'd do with the money after the sale. Because if you sell a high quality asset to avoid a tax change that you actually haven't properly modelled, you may save a future tax headache and create a long-term wealth amputation. So don't ask, should I sell before the date? Ask, does this asset still deserve a place in my long-term plan after the rule changes? That's the smarter

Starting point is 02:31:57 a question. Question three, should I only buy new bills now? No, but you should look at them more seriously than many investors have in recent years. The budget has clearly made qualifying new supply more attractive from a tax perspective. Negative gearing is restrained. Future CGT choice is retained. And all of that matters, but the investment still has to work. So the better question is, is this the right new build in the right location with the right demand, the right design, the right team, and the right numbers? Because the answer to any of that is no, and the tax benefit is just lipstick on a brick, a very expensive brick. Question four, are established properties dead? No, not even close. But established property investing after budget night has become

Starting point is 02:32:55 much more selective. Scarce, well-located owner-occupier appeal homes with genuine long-term demand can still be excellent investments. In fact, some may become more attractive if frightened investors temporarily step away and create better buying windows. But weaker established properties, especially those with poor yield, weak demand and no real scarcity, are more exposed. So no, established property is not dead, but the average tax-offened dud has just become easier to identify. The quality keeps floating to the top. The dross drowns faster.

Starting point is 02:33:35 Question five, will this fix housing affordability? Well, maybe marginally temporarily at best. Even under the government's own very optimistic modelling, this is expected to slow price growth, not property prices, price growth, by around 2% over a couple of years compared with what may otherwise have happened. That's not a housing reset, that's a small temporary speed war. And while some first-home buyers may face slightly less investor competition in some pockets for the established market,

Starting point is 02:34:11 the real affordability drivers remain. Short supply, block planning, high construction costs, rising interest rates, little wage growth, lots of migration, limited infrastructure and household buying capacity. So if someone tells you this budget has solved the housing crisis, they're either confused, election campaigning or using the word sold with the precision of someone who calls a wet town a renovation.

Starting point is 02:34:42 Question six, will rents fall? Well, I definitely wouldn't bank on that. In already tight rental markets, which most of the country is suffering, rents are driven by one brutal question. How many households need homes versus how many homes are available? If an investor demand for established rentals falls faster

Starting point is 02:35:02 than new supply comes online, then rental pressure can remain and rents will increase. The government says the rent effect is going to be very small. Well, I hope they're right. But renters don't pay treasury models. They pay actual market rent. And if vacancy continues to stay thin, rents are far more likely to stay firm and rise

Starting point is 02:35:23 than suddenly roll over and start apologising. Question seven. What does this mean for rent vesting? Well, definitely harder, but not dead. Rent vesting still makes strategic sense for many younger Australians who can't buy where they want to live, but they can invest where the numbers work. However, if your rentvesting strategy relied on highly geared established property, significant annual

Starting point is 02:35:48 negative gearing benefits, and very tight cash flow, then the budget has made that model more difficult. Not impossible, but just more difficult. So rentvesters now need stronger cash flow modelling, more carefully chosen assets, possibly a closer look at qualifying new builds, more disciplined buffers and very clear advice before jumping in. So the ladder hasn't been removed, but one rung has definitely been lifted higher. Question eight, what should trust users do now? Simple, get advice. Don't restructure blindly. Don't assume every trust is doomed. Don't assume nothing needs changing. And definitely don't let someone with a YouTube thumbnail that says trust tax bombshell, talk you into a major structure move before the draft law is properly

Starting point is 02:36:38 understood. If you use a discretionary trust, you need to review what assets it holds, what income it receives, who the beneficiaries are, whether bucket company strategies were part of the tax planning, whether the new 30% minimum tax may affect you, and whether any restructure is worth the tax, duty, legal and lender consequences. This is a professional advice moment, not a group chat consensus moment. Question nine, what happens to bad buyers, agents and property influencers? Hopefully, they have a much harder time. The business model of putting naive investors under pressure, funding them toward the same interstate established stock, promising certainty through one size fits all hotspot, picks that they've self-created and turning kind urgency

Starting point is 02:37:26 into business growth has become much less defensible. Thank heavens. Because the post-budget world demands more accurate cash flow better tax understanding sharper finance strategy deeper location research and a lot less just get in now because prices are rising puffery good advisors will matter more local expertise is going to matter more independent due diligence will matter more and any advisor whose own property growth seems to depend on you buying whatever they're currently flogging deserves a very careful look so yes the buy anything interstate because I said so crowd may be about to do a massive Harold Holt bolt. And I definitely won't be holding a candlelight vigil. Question 10. What's the biggest opportunity created by

Starting point is 02:38:15 this budget? Well, here it is. The biggest opportunity is not hidden in the legislation. It's hidden in the overreaction to the legislation. Some investors will misread the rules. Some will freeze. Some will sell good assets because they fear the wrong thing. Some will stampede towards bad new builds because they chase the tax treatment instead of the asset quality. Some will assume that established property no longer works and walk away from opportunities that still make excellent long-term sense. That's where the prepared investor gets the edge.

Starting point is 02:38:46 Not by being reckless, not by trying to outsmart the tax office, not by pretending that rules don't matter, but by understanding that change is better than the herd, then acting calmly with others are reacting emotionally because times of change create the biggest openings for people who can keep their head while others are losing theirs and posting about it in all caps so if you remember nothing else from this bushfire ambush remember this existing investors protected but untouched future and established investors more challenged but not shut out. New builder investors, more favoured, but still need real due diligence.

Starting point is 02:39:26 Rent investors, still viable, but the strategy's got to sharpen. Trust users, review carefully, not recklessly. Renters, not likely to be helped to supply falls. And strategic investors, possibly entering one of the more interesting opportunity windows that we've actually seen in years, because the budget changed the rule book. It didn't remove the game. and that brings us to the bigger food for thought point. What does all of this really mean for the way we think about investing, freedom and our next move? Because after all the detail, the tax settings,

Starting point is 02:40:02 all the dates, the definitions, the modelling, the outrage and all the political interpretive dance, we need to zoom back out because the rules have changed but the principles haven't and that distinction is everything. The budget has changed how future established property investors are taxed, how some losses can be used, how future capital gains may be calculated,

Starting point is 02:40:25 how trust may be treated, and where government policy is now trying to steer private investor capital. That's real. And that matters. And anyone pretending nothing changed is whistling through the graveyard with a tax file number. But at the same time, property investing still rewards the same core things it rewarded before budget night.

Starting point is 02:40:43 Scarcity, demand, quality, patience, holding power, cash flow discipline, sensible leverage and the ability to think in decades while everyone else is flapping about in hourly headlines. Those principles didn't expire at 7.30pm on Tuesday night. In fact, I'd argue they matter more now because when the rules are generous, mediocre decisions can survive for longer. When tax settings soften the pain, people can convince themselves that they're actually brilliant investors when really the policy cushions

Starting point is 02:41:15 have been doing most of the heavy lifting. But when the cushioning reduces, when the free air gets taken out of the tyres, when the spreadsheet has to stand on its own two feet, you discover who's had a real strategy and who's just been carried by momentum and a refund check. It's like when the training wheels come off a bike. you very quickly learn who's actually learned to ride and who's just been pushed down the driveway

Starting point is 02:41:40 by mum this budget takes a few training wheels off lazy paid property investing and while that may create some wobbles it may also be the making of better investors because tax was never meant to be the strategy tax is the seasoning the asset is the meal finance is the cutlery structure is the plate. Your long-term strategy is the recipe and if the mill is rotten no amount of tax source saves the dimmer. That was true before the budget and it's even more true now. So here's the real post-budget food for thought. Don't ask only what did Canberra take away, also ask what has this change now made clearer? It's made clearer that you can't rely on tax perks to compensate for weak asset selection. It's made clearer that holding power is not optional. It's made clearer

Starting point is 02:42:37 that ownership structure deserves serious thought before purchase, not panic reviewed after the horse has left the paddock and hired a tax lawyer. It's made clearer that good new build strategy may be more attractive, but only when demand, scarcity, design, feasibility and control delivery all line up. It's made clearer that established property isn't dead, but weak established property is going to find life a lot less forgiving. And it's made clearer that the prepared investor has an opportunity that the reactive investor is going to miss. Because while the fearful freeze and the furious keep refreshing the comments section, the strategic investor quietly asks, what still works? What works better now? What gets mispriced while everyone else is distracted?

Starting point is 02:43:27 Where's the quality being unfairly punished by broad brush fear? Where's the demand that tax noise can't erase? And where can I take considered action that my future self will one day be very grateful that I had the courage to take? And that brings me to this week's quote of the week. And it comes from management thinker Peter Drucker, who said that the greatest danger in times of turbulence is not the turbulence, it's to act with yesterday's logic. Now let that one sit with you for a moment, because it absolutely nails the post-budget investor moment. The danger is not simply that the tax rules changed, the danger is continuing to invest as though they didn't. The danger is applying yesterday's assumptions to tomorrow's decisions. The danger

Starting point is 02:44:18 is using an old map in a changed landscape then blaming the destination when you end up in a swamp with a dead phone and no snacks. Yesterday's logic said buy the established property, negative gear the shortfall, wait for the growth and enjoy the discount on the way out. Today's logic must ask, does this asset still work if the cash flow relief is weaker? Is the new build lane now strategically superior for my situation? Does my entity still make sense? What does my borrowing capacity look like under the new settings? Can I hold this for the long term?

Starting point is 02:44:56 And is this a quality investment or just an old habit with a property manager? That's the intelligent response. Not panic, not paralysis, but adaptation. And that's why the smartest investors from here won't necessarily be the loudest. They won't be the angriest. They won't be the ones posting the most furious memes of the treasurer with laser eyes.

Starting point is 02:45:19 They'll be the ones who absorb the change, seek good advice, review their strategy, act when the numbers and the opportunity line up and keep moving toward financial freedom with our eyes open and their blood pressure still within medically recommended limits. Because change doesn't destroy good strategy, it tests it. And if your plan only worked when the tax weather was sunny,

Starting point is 02:45:42 then it wasn't a robust plan. It was a picnic rug with optimism folded into the corners. Now, the weather's shifted, so don't pack up and go home, check the forecast, put on the right jacket, move the esky under cover, and keep enjoying the day. The rules change, the principles doesn't. and if you understand that difference you're already well ahead of the herd which brings us to the close because I want to leave you with exactly what to do next, how to get help if you

Starting point is 02:46:12 need it and why this episode's one that you shouldn't keep to yourself. So let me land the whole conversation where it matters most. The budget's changed the property investing rulebook not completely, not catastrophically but materially and pretending it hasn't changed would be foolish, just as pretending property investing is now dead would be lazy nonsense and a dramatic hat. The truth is more important than either extreme. The old tax-assisted playbook has changed. The future established property investor has a steeper climb. The qualifying new-born investor has been handed a stronger relative position. Trust structures need a serious second look. Existing investors have been protected in some important ways,

Starting point is 02:46:56 but not left completely untouched and the biggest edge from here will belong to those who stay calm get clear seek proper advice and make decisions based on strategy rather than headlines that are screaming them like a toddler who's just discovered the word no so here's my simple post-budget message to you don't panic do prepare then play the new game better than the herd because times of change create some of the greatest investment opportunities, but only for those who are prepared to understand what's changed, what's not, and where the new asymmetry now sits. Because when the crowd's confused, when the commentators are contradicting each other, when vendors, buyers, investors, and advisors are all recalibrating, that's precisely when

Starting point is 02:47:45 the prepared person can make their best decisions. Not rushed decisions, not reactive decisions, considered decisions. And if this episode has helped you, if it's made the budget changes clearer, if it's helped calm the nerves, if it's shifted you from fear to strategy, then save it for yourself. Because I suspect this is one that you may want to revisit as at the 1st of July 27 and the 1st of July 2028 as they start moving from distant dates to real decision time. And please don't keep it to yourself. Share it with your partner, share it with your family, share it with your friends who own property, friends who want to invest, friends who are renting and desert to understand the other side of the policy story, and anyone who's been told that this budget has

Starting point is 02:48:30 magically solved housing affordability without asking what it may actually cost downstream. And yes, send this episode to your local politician. Because before they celebrate these changes as a triumph of fairness, they need to understand the real world consequences for young investors, rent investors, self-funded retirees, rental supply, private capital, business confidence and Australians who took long-term risk in good faith under the rules that they were given. They need to remember what they've done

Starting point is 02:49:00 when the next election comes around because promises matter, trust matters and voters are allowed to keep receipts. And if you want property investors to have a stronger voice on all of this debate, join and support Picker Now, the Property Investors Council of Australia because individual investors complaining in scattered corners of social media

Starting point is 02:49:19 are very easy to ignore. But a coordinated, informed, constructive investor voice, that's going to get noticed. And after this budget, property investors need that voice more than ever. And you'll find the picker link in the show notes. Now, if all of this has left you thinking, bushy, I need to understand what this means for my actual situation, then that's exactly what a property mentoring session

Starting point is 02:49:42 or a property solution session is designed to help you with because your expense, your response depends on your age, your income, your debt, your existing properties, your ownership structures, your buying capacity, your cash flow, your risk appetite, retirement horizon, and the role that property is meant to play in your wider self-health and wealth plan. There's no one-size-fits-all answer here, but there is a better answer for you once your situation is properly understood. So if you want to review whether your existing assets still fit, whether you should buy again, whether new build now deserves a stronger place in your strategy, whether commercial property or other pathways need consideration, whether your

Starting point is 02:50:21 structures need review, or simply what your next best strategic move should be, then feel free to reach out. Book in a session. Let's help you to make good decisions before expensive ones start making you. And please remember, everything I've shared in this episode is general information. it's not personal financial advice it's not tax legal accounting advice I don't know the full detail of your life your numbers your entities your loans your tax position or your sleep at night setting or how many unexpected repair invoices your portfolio has thrown at you this month so before you buy you sell you restructure you refinance you change your ownership entities or make any major tax or investment decision please speak with the right qualified professionals

Starting point is 02:51:04 to your specific circumstances, like your accountant, your lawyer, your financial advisor where appropriate, your broker, like our investment specialist team at Know How Property Finance, and your property strategist. Because clarity is powerful, but personalised clarity is where good decisions actually get made. So, freedom fighters, the budget changed the rule book. It didn't change your need to live by design and not by default. It didn't change the value of long-term thinking. It didn't change the importance of quality assets, good structures, strong buffers, and strategic action. And it didn't change the fundamental truth that your future will belong far more to the decisions that you make deliberately than the headlines that you

Starting point is 02:51:49 react to emotionally. So don't panic. Prepare. Review. Recalibrate. Then play the new game better than the herd because change is not the enemy of wealth creation, unpreparedness is. So thanks for listening and remember, always think better than the headline, always think longer than the election cycle and always, always get invested. Thanks for tuning in to Get Invested on the Property Hub podcast channel, your home for property investment insights and inspiration. Make sure you subscribe to Property Hub for free. Get your weekly dose of Get Investing inspiration, along with every episode of Realty Talk, Australia's top online property show for red hot property investing news and insights direct from industry leaders and influencers. And finally, I'll see you next time.

Property Hub - Investment Insights & Inspiration - Get Invested Special: The new post-budget property tax investor’s playbook

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