Federal Budget 2026: How Perth renters will be impacted

Perth property experts fear the number of rental properties close to the city will shrink – and rents spiral – in the wake of new tax rules which no longer give investors negative gearing tax breaks on established properties.

Treasurer Jim Chalmers’ Federal Budget sees the abolishment of negative gearing on established properties – negative gearing only applicable to new homes builds as of July 1 next year.

Negative gearing will however, still apply to investment properties purchased before 7.30pm on budget night (May 12).

The Government will also replace the 50 per cent capital gains tax discount with a discount based on inflation-adjusted indexation.

The CGT reforms will only apply to gains arising after July 1, 2027.

Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements.

Investors who buy an investment property after budget night, will be caught up in the new rules.

“Investors who buy established housing after budget night will still be able to deduct losses against residential property income,” according to budget papers.

“They will be able to carry forward unused losses to future years but won’t be able to deduct them against other income like wages.”

The government believes the tax changes will help around 75,000 homeowners into the market over the next decade.

But Perth property analyst Gavin Hegney warned investors would leave the rental market if they could not claim the negative gearing tax breaks.

He said rents would rise for dwindling stock – particularly for houses close to the City.

Mr Hegney said new builds were traditionally in subdivisions in outer suburbs – which were less attractive to investors because of slower capital gains.

“For investors to buy established properties with no negative gearing ability will require them to be compensated with having higher rents, effectively increasing the yield that they get from the investment,” Mr Hegney said.

“Therefore this policy change will result in higher rents for established properties relative to their values before investors are enticed to step back in and commence buying.”

There are just 2246 dwellings advertise for rent in Greater Perth.

The median dwelling rate at the end of April was $720 a week.

REIWA boss Suzanne Brown said investors, wary of negative gearing and capital gains tax changes, had already sought to sell up in past weeks.

“Our members have seen an increase in the number of sales by investors, and appraisals for investors, in the lead up to the budget,” Ms Brown said.

The Federal Government believes the new property tax rules give young people a better shot at getting into their first home, with a heavy focus on helping create new builds traditionally in outer suburbs by providing $2 billion to councils for infrastructure costs to unlock undeveloped land.

A further $1 billion has been provided in a joint State/Commonwealth programme to build 34,000 homes in WA over eight years – 11,000 for first home buyers.