Negative gearing is out. Debt recycling just got more attractive.

The 2026 Federal Budget changed the rules for investors. I’ve spent 18 years building financial plans for high income tech executives. The pattern after every major tax change is the same. The headlines are louder than the reality.

This one is no different.

The changes are now law. They start from 1 July 2027, and most existing arrangements are grandfathered.

The rules change. The principles don’t.

Three changes worth understanding

Negative gearing. Restricted for established residential property bought after Budget night. Property you already own is grandfathered, so nothing changes there.

If you buy an established property from here, losses won’t offset your other income from 1 July 2027. They carry forward instead, so you still get the benefit when you sell.

Investor borrowing capacity is also expected to drop 10 to 20%. Worth factoring in if you plan to borrow in the next 12 to 24 months.

Capital gains tax. From 1 July 2027, the 50% CGT discount is replaced by indexation with a minimum tax on real gains. For many high earners, the effective CGT rate rises from around 20 to 22.5% today to around 30 to 35%.

Any gain built up before 1 July 2027 keeps the old rules, even if you sell later. Only growth after that date is taxed the new way. So there’s no rush to sell.

One practical step: get a documented market valuation of investments held in your own name before 1 July 2027. That valuation locks in how much of your gain stays under the old rules.

Discretionary trusts. A 30% minimum tax on trust distributions has been proposed from 1 July 2028. It isn’t law yet. Watch this one, but don’t restructure on a proposal.

What hasn’t changed

Your home: you still sell it tax free.

Super: still the most tax efficient vehicle in Australia. Concessional contributions are taxed at 15% versus your marginal rate of up to 47%. Tax free in pension phase once you’re over 60.

And one positive: the transfer balance cap rose to $2.1M from 1 July 2026. That’s a wider window to move assets into the tax free pension phase.

The strategy the Budget made more powerful

Here’s what most investors are missing in the noise.

Negative gearing on established property is ending. Negative gearing on shares and ETFs is not.

That distinction matters more than most people realise.

Debt recycling converts your non deductible home loan into tax deductible investment debt. You use the equity in your home to invest in shares and ETFs. The interest becomes tax deductible. The investments pay franked dividends. And you pay down your mortgage faster at the same time.

At a 47% tax rate, $500,000 of deductible debt at 6.5% gets you back around $15,000 a year in tax. That’s before a single dollar of investment return.

The Budget didn’t touch this. If anything, it made debt recycling more attractive than property.

One structure worth a closer look

With CGT rising for individuals, company structures deserve a proper conversation for new investment money.

On a 47% marginal rate, every dollar of investment income in your own name is taxed at 47%. A company pays 30%. That 17 cent gap compounds over a 10 to 15 year build up.

Shares and funds are easy to hold in a company. And franking credits still flow, so the tax the company paid offsets what you owe when you draw income out.

What this means for property

After tax returns on established property are estimated to fall from around 11% a year to 8.4%. New builds are projected at around 8.5%. Barely better, and that’s before weaker growth, developer margins and off the plan risk.

The tax advantage on new builds is real. The return advantage is not.

Tax benefits are the cream, not the cake. Every investment needs to work before tax first.

Where do you stand?

I’ve built over 300 personalised retirement plans for tech executives. The ones who come out ahead aren’t the ones who react fastest. They get the right structure in place early and let it compound.

Read more: how debt recycling works, or book an Early Retirement Clarity Call to see what these changes mean for your numbers.