Did new builds win the budget?

The dust is settling on Treasurer Jim Chalmers' Federal Budget, and if you've spent any time on social media in the last two weeks, you'll have seen the memes. Small business owners across the country have been sharing AI-generated images of Anthony 'Albo' Albanese reimagined as a silent business partner; a jab at Labor's controversial changes to capital gains tax, despite earlier assurances no such reforms were planned.

But zoom out a little, get away from the online debate, and the picture looks quite different for property, particularly new builds and off the plan.

What changed

The Government will limit negative gearing to new builds from 1 July 2027, to focus tax support on new supply. For investors in established residential properties purchased after Budget night, negative gearing will be abolished from 1 July 2027 and investors affected will no longer be able to offset rental losses against salary or other personal income.

New builds, however, are a different story entirely. If you invest in newly built property, the current negative gearing rules continue to apply with no changes. Rental losses on new builds can still be deducted against your salary and other income. This applies to new house and land, off the plan properties, and new construction on previously vacant land that adds to housing supply.

On CGT, investors in new builds have the choice of the 50 per cent discount or the new indexation model, whichever delivers the better outcome. That's a notable concession, and one that doesn't apply to buyers of established homes.

What it means for the off the plan market

The Budget has effectively drawn a line in the sand. Invest in new supply, and the tax settings remain favourable. Invest in established housing, and the rules have tightened considerably. The actual design is more nuanced than 'negative gearing is dead' as was the catch cry of many the morning after the Budget was announced. Existing investors are protected, new builds are incentivised, and the CGT model has shifted from a flat discount to one tied to actual inflation.

For LINK's CEO, Michael Klevansky, the Budget's impact on the established market is what makes off the plan more compelling. "Overall, it's going to be great for off the plan property," he said the morning after the Budget. "What we're going to see is a lot of capital put back into the primary place of residence. It's still the only tax-free environment in property. People put that into their existing property or they'll trade up to a bigger property, and I think that's going to create some interesting demand dynamics over the next six to twelve months and push up the prices of the general existing market."

The price gap is closing

Off the plan property has traditionally been priced at a premium to established stock, and that gap has been a genuine friction point for some buyers. But that dynamic is changing. As Michael noted, new builds are "probably priced somewhere between fifteen to twenty percent above the market at the moment" but with established property prices likely to rise on the back of increased demand and tightening supply, that gap is set to narrow.

"With the benefits of negative gearing and capital gains," he said, "off the plan property investors are going to see a fantastic outcome over the next seven to ten years."

Income tax cuts adding to the equation

In more good news, the property changes don't sit alone. All Australian taxpayers will benefit from previously legislated personal income tax cuts from 1 July 2026, alongside a new $1,000 instant tax deduction for working expenses. A Working Australians Tax Offset of up to $250 will also come into effect from 2027-28, benefiting over 13 million Australian workers. More money in people's pockets means more capacity to service a mortgage, and for those already considering a property purchase, the timing adds another reason to act.

It's time to look to off the plan

The noise around this Budget has been loud, and some of it is justified. But for buyers and investors looking at quality new developments, the settings are arguably more favourable now than they were before Budget night. The Government has made its position clear. New supply is where the tax advantages sit, and off the plan properties sit squarely in that category.

As Michael put it: "If you're thinking about investing in property, it's time to look at high-quality off the plan solutions."

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