Federal Reform Changes - How Are You Affected
The Rules Just Changed - And Your Property Could Be Worth More Than You Think
There have been alot of changes in the last few months, whether you are looking at the Federal Budget which has reshaped the tax landscape for residential properpty investors, or the recent changes the WA Government just annouced pertaining to the most significant overhaul of our state’s residential planning codes, it is safe to say a lot is going on!
We are reaching out to bring you a summary of the changes and how they affect you, but most importantly how we are your brokers can help you.
Federal tax reform & WA planning changes - what every property owner should know
Perth’s biggest planning shake up in 30 years
On 2nd July 2026, Planning and Lands Minister John Carey annouced sweeping reforms to Western Australia’s Residential Design Codes - the R Codes- that have governed how homes can be built and subdivided across the state since their introduction in the 1990s. The propsed overhaul has been described as the most significant reform to the R-Codes in over three decades, and it has the potential to fundamentally change what is possible on thousands of Perth suburban blocks
The centrepiece of the package is the removal of the long-standing average lot size requirement for land zoned R20 and below. For many years, this requirement has been the principal barrier preventing owners of standard suburban lots from subdividing or developing their land more intensively. Its removal could unlock what planning industry bodies estimate to be more than 50,000 additional subdivision opportunities across metropolitan Perth — a number that reflects the scale of the pent-up development potential sitting dormant in established suburbs. The reforms also address dual-coded properties — those carrying codes such as R20/R40 — which have historically created uncertainty about what development is actually permissible. Simplification of these rules is expected to make it clearer and faster for owners of dual-coded blocks to understand and access the higher development potential their zoning nominally allows. It is important to understand where these reforms currently sit. The proposed changes are expected to be released for public consultation later in 2026, with the State Government targeting implementation from mid-2027. They are not yet in effect, and the final form of the rules may be adjusted following consultation. The latest data published alongside the announcement showed that urban infill accounted for 39 per cent of new housing in Perth in 2024 — up from 34 per cent the previous year but still below the long-term government target of 47 per cent. These reforms are a direct response to that gap.
The team at house & home loans have not only assisted many of our clients on this development journey but have also been the developers of many properties. We bring to you this multi-faceted expertise that can enhance your property and investment journey.
Negative Gearing & Capital Gains Tax
What has changed?
The federal government has now passed landmark legislation reforming how residential investment properties are taxed in Australia. These changes — announced on 12 May 2026 as part of the 2026-27 Federal Budget — represent the most significant shift in property investor tax arrangements in decades, and they are now law. The key reference point for every property owner is 7:30pm AEST on 12 May 2026. Whether you purchased before or after that moment, and whether your property is an existing dwelling or a new build, determines almost everything about how these rules apply to you.
On negative gearing, the changes are significant but carefully targeted. From 1 July 2027, negative gearing on established residential properties purchased after 7:30pm on 12 May 2026 will be restricted. Under the new rules, any rental losses on those properties can only be offset against rental income or capital gains from other residential property — not against salary, wages, or other personal income. Losses that cannot be used in a given year are not lost; they carry forward to future years and can be applied against future rental income or gains.
Importantly, if you already owned a residential investment property at 7:30pm on 12 May 2026 — or had exchanged contracts on one before that time — you are fully grandfathered. Nothing changes for you until you sell. You can continue to negatively gear under the existing rules for as long as you hold that property. The same grandfathering applies if you were under contract but had not yet settled at the announcement time.
The most significant carve-out in the legislation is for new residential construction. Eligible new builds are entirely exempt from the negative gearing restrictions. Investors who purchase or develop new dwellings retain full access to negative gearing, with losses able to be offset against all income as before. This exemption reflects the government's stated intention of redirecting investment capital toward new housing supply rather than existing stock. Build-to-rent developments, widely held trusts, superannuation funds, and investors participating in government affordable housing programs are also exempt. Commercial property and shares are unaffected by these changes.
On capital gains tax, the changes apply more broadly. From 1 July 2027, the existing 50 per cent CGT discount will be replaced with cost base indexation and a 30 per cent minimum tax rate on realised capital gains. This means investors will only pay tax on the real, inflation-adjusted gain on their asset — which the government describes as restoring the original intent of the CGT arrangements introduced in the 1990s. The transitional arrangements are meaningful: the new rules apply only to gains that accrue after 1 July 2027, and investors in new builds can choose between the old 50 per cent discount and the new indexation method when they eventually sell, whichever works in their favour. Superannuation funds retain their existing one-third CGT discount and are not affected by the minimum tax. The main residence exemption is also unchanged.
Why these two changes matter together
The timing of the federal tax changes and the WA planning reforms is not coincidental — and for property owners in the right position, the combination could be genuinely significant. New residential dwellings developed from eligible infill or subdivision projects would, under the current federal legislation, qualify for the new-build exemptions that preserve both negative gearing and the 50 per cent CGT discount. In other words, developing rather than simply holding an established property could, in general terms, produce a meaningfully different tax outcome for investors going forward. This is not financial advice, and individual circumstances will vary considerably — but it is exactly the kind of situation where having an experienced development finance broker in your corner, alongside your accountant and financial adviser, can make a real difference.
We have done this kind of work for a long time
Small residential development finance is a specialised discipline. A duplex, a triplex, a battleaxe subdivision, a grouped dwelling project, or an ancillary dwelling on an existing lot all require funding structures that look quite different to a standard home loan. Construction facilities, land subdivision finance, progressive drawdown arrangements, and equity release strategies each come with their own lender requirements, timing considerations, and risk profiles — and the difference between getting the structure right and getting it wrong can be the difference between a project that works and one that doesn't.
Over the past 25 years we have guided clients through all of these scenarios, across a wide range of property types, locations, and market conditions in Australia and across Greater Australia. We understand how lenders approach small development proposals, what they need to see in terms of feasibility and pre-sales, and how to structure the finance conversation in a way that gives a project the best possible chance of proceeding on realistic terms.
We are not here to tell you whether you should develop your property, or what the right investment decision is for your circumstances — those are conversations for your accountant, financial adviser, and legal professional. What we can do is help you understand the financing options that may be available, explore what a development finance structure might look like for your situation, and ensure that when you do sit down with your broader advisory team, the finance piece of the picture is clear and well-considered.
Is your property worth a conversation?
If you own residential property in Perth — particularly in an established suburb with R20 or dual-coded zoning — now is a sensible time to have a no-obligation conversation with us about what these changes might mean in general terms and whether development finance structuring is something worth exploring further with us. We are happy to talk through what we are seeing in the market, the kinds of finance structures that have worked for similar projects, and the questions worth asking before committing to any course of action. There is no pressure and no commitment — just a conversation with people who have been doing this for a long time.