6 budget takeaways and what they mean for your finances
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Budget at a glance | Cost of living relief | Capital gains tax changes | Negative gearing changes |
First-home buyers | Income tax changes | House prices
Treasurer Jim Chalmers has handed down his fifth federal budget, calling it “the most important and ambitious budget in decades”. But what does it actually mean for your money, your tax and the cost of everyday life?
The budget tries to balance several pressures at once, including higher fuel prices, rising everyday costs and interest rates. It also looks at longer term challenges like the rising cost of disability support, fuel supply and housing affordability.
The budget at a glance
Inflation
Budget deficit
Cost of living relief: what you notice first
The government says this budget is about easing pressure now, while making longer term changes. The immediate impact for most households will come through fuel relief and tax changes detailed later in this article.
Toegther the cost-of-living relief and tax cuts could benefit the average worker by up to $2,816 in 20281.
What changes to capital gains tax mean for property investors
Many cost-of-living measures and tax cuts come with trade-offs - and the government’s looking at generational changes to capital gains tax (CGT), negative gearing and trusts to pay for them.
CGT applies when an asset, such as an investment property or shares, is sold for more than its purchase price. In simple terms, it’s the tax you pay on the profit you make when you sell an investment.
Previously, Australians who held an asset for more than 12 months could generally access a 50 per cent CGT discount. That discount has been popular with property investors. Under these changes, a minimum capital gains tax rate of 30% will apply from July 2027. That means investors will pay at least 30 per cent tax on any profit from selling certain investments, regardless of their personal tax rate.
Investors in newly built properties will retain access to the existing CGT concessions in a push for more housing construction.
Not sure about what these mean for you? Speak to your financial or tax adviser to learn more.
What the changes to negative gearing mean (and what negative gearing actually is)
Changes to negative gearing are the second pillar aimed at improving access to housing for younger Australians. This is one of the biggest shifts to property investment rules in decades.
Negative gearing happens when the costs of owning an investment property, including loan interest, maintenance, insurance and rates, are greater than the rental income the property earns.
Those losses can currently be deducted from taxable income, reducing an investor’s tax bill.
From July 2027, negative gearing tax concessions will apply only to new builds. Existing investment properties will be excluded from the changes.
If you’re unsure how these changes apply to your situation, a financial or tax adviser can help explain what to consider.
How will the budget impact first-home buyers?
Much of this budget is aimed at younger Australians struggling to buy their first home.
Income tax changes and what they mean for your take home pay
This year’s budget has several changes to how much tax workers and small businesses pay.
Everyone’s financial situation is different. A financial or tax adviser can help you understand what this may mean for you.
Will the budget lower house prices?
The budget is designed to slow house price growth rather than lead to a major fall in prices. The logic is relatively straightforward: if property investment becomes less tax-effective, fewer investors may compete against first-home buyers at auctions, particularly for existing homes.
Treasury analysis suggests prices are unlikely to be noticeably affected in the short term . These are forecasts based on economic assumptions, not guarantees about what will happen in individual suburbs or markets. The government estimates house prices could grow around 2 per cent less than they otherwise would have over the next few years or about $19,000 on a median-priced home. Rental prices are expected to increase slightly before falling in the next few years.
What is the federal budget and why does it matter to you?
What does the budget mean for my household?
Contributor | Anthony Moir, Treasurer
Anthony joined Pepper Money in February 2021 as Treasurer. With over 25 years of experience in treasury and debt capital markets, he has worked with a diverse range of bank and non-bank lenders. Read more.
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