The Federal Budget has put property investment back in the spotlight.
For NSW landlords, the biggest conversations are around capital gains tax, negative gearing, long-term holding strategies and whether current investment properties are still performing as they should.
But a Budget announcement does not automatically mean every investor needs to sell, stop investing or change their strategy overnight.
It does mean property owners should take a closer look.
A good investment property is not just about tax treatment. It is about holding the right asset, keeping it tenanted, maintaining it properly, reviewing rent consistently and making informed decisions over time.
If you own an investment property in NSW, now is a useful time to review your position, speak with your accountant or adviser and understand how your property is performing from both a financial and management perspective.
For a more detailed breakdown, complete the form to receive Leah Jay’s Federal Budget Guide for NSW property investors, which covers the key areas landlords may wish to review.
This article is general information only. It should not be relied on as financial, legal, investment or tax advice. Always speak with your accountant, financial adviser, solicitor, broker or tax professional before making decisions about buying, selling, holding or restructuring an investment property.
Contents
What Changed in the Federal Budget?
The Federal Budget announced changes that may affect how property investors are treated under the tax system.
The two key areas for landlords are:
- Capital gains tax
- Negative gearing
These changes are designed to reduce some of the tax advantages available to property investors and place more focus on new housing supply.
For landlords, the practical questions are less about reacting quickly and more about understanding what may need to be reviewed.
Key questions include:
- What does this mean for my current investment property?
- What does this mean if I buy another property?
- What does this mean if I plan to sell in the future?
- What does this mean for a buy-and-hold strategy?
- What should I review before EOFY?
Those questions are worth working through carefully. The right answer will depend on your personal circumstances, ownership structure, property type, holding costs, investment goals and professional advice.
Capital Gains Tax: Why Your Exit Strategy Matters
Capital gains tax, commonly known as CGT, may apply when you sell an investment property for more than you paid for it.
For long-term property investors, CGT can be one of the biggest tax considerations. This is especially true for investors who have held a property for many years and seen strong capital growth.
Under the announced Budget changes, the current 50% CGT discount is expected to be replaced with a different system based on cost base indexation. The Government has also announced a minimum tax rate on capital gains, with the changes expected to apply from 1 July 2027 and only to gains accruing after that date.
In simple terms, your future sale strategy may need more attention.
That does not mean every investor should rush to sell. Selling an investment property can trigger tax consequences, transaction costs and future opportunity costs. It may also remove a long-term asset from your portfolio.
The better starting point is to ask:
- What is my property worth now?
- What was my original purchase price?
- What records do I have?
- What improvements have been made?
- What is my likely future sale timeframe?
- How could the proposed CGT changes affect me personally?
That last question needs professional advice. Your accountant or tax adviser is best placed to explain how the rules may apply to your circumstances.
Why Record Keeping Matters More
If CGT becomes a larger consideration for long-term property investors, accurate records become even more important.
This is not something to leave until the year you sell.
If you hold a property for 10, 15 or 20 years, it can become difficult to reconstruct the full cost base later. Good records may help your accountant assess your position more accurately when the time comes.
Property investors may wish to keep records of:
- Original contract of sale
- Purchase price
- Stamp duty
- Legal and conveyancing costs
- Buyer’s agent fees, if applicable
- Building and pest reports
- Loan establishment costs
- Capital improvements
- Renovations
- Major repairs
- Depreciation schedules
- Valuations
- Refinance documents
- Tax statements
- EOFY owner statements
- Selling costs, when applicable
The goal is not to make tax decisions yourself. It is to make sure your accountant has the information they need to give proper advice.
Negative Gearing: What Landlords Should Understand
Negative gearing occurs when the costs of owning an investment property are higher than the income the property produces.
For example, if loan interest, maintenance, rates, insurance and other deductible expenses exceed the rental income, the property may produce a tax loss.
Under current arrangements, many investors have been able to offset those losses against other income, such as salary and wages.
The Budget changes limit how this may work for future purchases.
For existing investment properties held before Budget night, the negative gearing changes are expected to be grandfathered. Future purchases of new builds may still access negative gearing, while future purchases of established residential properties may be treated differently.
For existing landlords, the important point is not to panic.
The changes do not automatically mean your investment property has become a poor asset. They also do not mean every investor needs to sell.
They do mean investors may need to look more closely at the property’s fundamentals.
Questions worth asking include:
- Is the property generating reliable rental income?
- Is it in a strong rental market?
- Is the rent aligned with current market conditions?
- Are holding costs increasing?
- Is the property becoming more expensive to maintain?
- Does the asset still support your long-term investment goals?
Tax treatment matters, but it should not be the whole strategy.
Does Buy-And-Hold Still Make Sense?
For many investors, buy-and-hold may still make sense.
But the strategy needs to be considered properly.
A buy-and-hold strategy is not about chasing short-term tax advantages. It is about buying a quality asset, holding it over time, managing it well and allowing long-term growth to do the heavy lifting.
The Budget changes may reduce some tax concessions, but they do not remove the core reasons many people invest in property.
These may include:
- Long-term capital growth
- Rental income
- Portfolio growth
- Wealth building over time
- Diversification outside superannuation
But buy-and-hold only works when the asset is worth holding.
That means looking at:
- The quality of the property
- The suburb and local demand
- Rental yield
- Vacancy risk
- Holding costs
- Loan structure
- Maintenance requirements
- Property management quality
- Your personal investment goals
A property that only works because of a tax concession may need to be reviewed carefully. A property with strong fundamentals, reliable rental demand and long-term growth potential may still have a clear role in a long-term strategy.
Why Rental Performance Matters More Now
If tax settings become less generous for some investors, rental performance becomes even more important.
Your investment property needs to work harder as an income-producing asset.
That means landlords should review whether their rent is aligned with the market and whether their property is being managed proactively.
A $30, $50 or $80 per week rental gap can add up quickly over a year. If holding costs increase and tax benefits become less available in future, rental income, lease timing and property presentation matter even more.
Questions worth asking include:
- Is the current rent still aligned with the local market?
- When was the last rental appraisal completed?
- Has the property been under-rented?
- Is the tenant on a fixed-term lease or periodic agreement?
- When can the next rent be reviewed?
- Is the property competitive against similar rentals?
- Are there improvements that could support a stronger rental return?
- Is the property experiencing avoidable vacancy?
- Is the property manager reviewing rent proactively?
If you are unsure where your property sits, requesting an updated rental appraisal can give you a clearer view of current market conditions.
Is Your Investment Property As Healthy As Possible?
A rent review is a crucial way to ensure your investment is performing as it should in today’s market. Every property is different, but in some cases, there are additional steps that unlock your properties’ full potential and directly influence ROI.
Our Investment Services experts can help you maximise your rental income through a personalised Property Health Check, identify areas for improvement and create a plan to boost your returns. Here’s what they can do for you:
Boost your rental income: Identify strategies to maximise your monthly returns.
Optimise renovations: Analyse pre- and post-renovation scenarios to ensure smart investments with potential rent increases.
Explore hidden potential: Uncover opportunities like re-development or adding a granny flat (subject to local regulations).
Connect you with resources, like referring you to independent mortgage advisors if needed.
Now is the time to maximise your investment property’s income. Book a Property Health Check today to find out how.
Why Property Management Matters More Now
A strong buy-and-hold strategy depends on strong property management.
If landlords are under more pressure to hold assets efficiently, avoidable mistakes become more costly. Unnecessary vacancy, delayed maintenance, poor communication and missed rent review opportunities can all affect performance.
Good property management can help with:
- Reducing vacancy
- Reviewing rent
- Managing lease renewals
- Screening tenants
- Handling arrears
- Supporting long-term tenant retention
- Coordinating maintenance
- Protecting property condition
- Managing compliance
- Providing EOFY documentation
- Keeping records organised
- Advising on practical improvements
For investors, this can be a useful starting point before making bigger decisions about holding, improving or reviewing a property.
Leah Jay’s investment services team can help you look at the rental and operational side of your asset, so you can understand what is working, what may need attention and what questions to raise with your accountant or adviser.
What Existing NSW Landlords Should Review Now
For existing landlords, the Budget should be treated as a prompt to review, not a reason to panic.
The right next step is to get clear on how your property is performing and what advice you may need.
You may wish to review:
- Current rental income
- Current market rent
- Lease status
- Vacancy risk
- Maintenance needs
- Holding costs
- Loan structure
- Insurance
- Land tax exposure
- Depreciation schedules
- CGT records
- EOFY records
- Property condition
- Property manager performance
- Potential future sale timing
- Long-term plans
This does not need to be complicated. The aim is to understand whether your property is still supporting your strategy.
What Future Property Buyers Should Consider
For investors considering another purchase, the Budget changes may affect the decision-making process.
Future buyers may need to think more carefully about whether they purchase an established property or a new build. They may also need to review whether the investment still makes sense without the same negative gearing benefits that were previously available for established properties.
Before buying, investors may wish to consider:
- New build versus established property
- Expected rental yield
- Expected capital growth
- Holding costs
- Cash flow without full negative gearing benefits
- Vacancy risk
- Local rental demand
- Land tax position
- Long-term exit strategy
- CGT treatment on future sale
- Advice from an accountant, broker and financial adviser
Buying quickly just to preserve a tax outcome can be risky if the property itself is not right.
Tax should not make a bad property good.
Questions To Ask Your Accountant
The Budget changes are tax-related, so your accountant should be part of the conversation.
Questions may include:
- How could the CGT changes affect my property?
- How will gains before and after 1 July 2027 be treated?
- Does my ownership structure still make sense?
- What records should I keep?
- How do the negative gearing changes affect me?
- Am I grandfathered under the existing negative gearing rules?
- Do I need a property valuation?
- Could land tax be relevant to my position?
- Should I review my depreciation schedule?
- How would the rules apply if I buy a new build?
- How would the rules apply if I buy another property?
- What should I prepare before EOFY?
Every investor’s situation is different. A general Budget update cannot tell you what to do. Your accountant can help you understand the tax implications based on your specific circumstances.
Questions To Ask Your Property Manager
Your accountant can help with tax.
Your property manager can help with the performance of the asset.
You need both perspectives.
Questions to ask your property manager may include:
- Is my current rent aligned with the market?
- When should my rent next be reviewed?
- Is my property competitive against similar rentals?
- Is there strong tenant demand in my suburb?
- Are there improvements that could support better rent or tenant retention?
- Is my lease strategy appropriate?
- Has the tenant indicated whether they want to renew?
- Are there maintenance issues I should plan for?
- Have routine inspections identified any concerns?
- How many days was the property vacant this year?
- How quickly are comparable properties leasing?
- What should I be planning for over the next 6 to 12 months?
These questions can help you understand the operational side of your investment, not just the tax side.
Avoid Making Property Decisions Based On Headlines
After a major Budget announcement, it is easy to react quickly.
But property decisions should not be made out of panic.
Avoid:
- Selling purely because of headlines
- Buying quickly just to beat rule changes
- Assuming all properties are affected in the same way
- Treating tax benefits as the whole investment case
- Ignoring maintenance
- Letting leases roll without a strategy
- Failing to review the current rent
- Treating property management as just rent collection
Most importantly, avoid ignoring the performance of the property itself.
A strong investment property should have more than a tax story. It should have rental demand, a clear lease strategy, manageable maintenance, good records and a reason to keep holding it.
Key Takeaways
- The Federal Budget should be treated as a prompt to review, not panic. NSW property investors do not necessarily need to sell, stop investing or change strategy overnight.
- Capital gains tax changes make record keeping more important. Long-term investors should keep clear records of purchase details, improvements, valuations, depreciation schedules, EOFY statements and selling costs.
- Negative gearing changes may have a bigger impact on future buying decisions. Investors considering another property may need to compare new builds and established properties more carefully.
- Rental performance matters more when tax settings shift. Landlords should review current rent, market rent, lease timing, vacancy risk and whether the property is still aligned with local demand.
- A Property Health Check can help owners see where their investment stands. It can highlight rental performance, property condition, maintenance needs, improvement opportunities and long-term investment fit.
- Property management is part of the investment strategy. The right support can help reduce vacancy, review rent, manage leases, coordinate maintenance and give owners better visibility before making bigger decisions.
Review Your Investment Property With Clarity
The Federal Budget may change the tax environment, but it does not change the core principles of good property investment.
Quality assets matter.
Rental performance matters.
Strong records matter.
Professional advice matters.
So does good property management.
For NSW landlords, the next step is not to panic. It is to review your property, understand your position and speak with the right professionals before making decisions.
If you want a practical starting point, complete the form to receive Leah Jay’s free Federal Budget Guide for NSW property investors.
This guide is general information only and should not be relied on as financial, legal, investment or tax advice.
Get Leah Jay’s Free Federal Budget Guide
Complete the form to receive Leah Jay’s free guide and review the key areas NSW landlords may wish to consider, including CGT, negative gearing, rental performance, lease strategy and property management.