2026 Federal Budget Tax Measures: Potential Implications for New Apartment Supply

If implemented as announced, Australia’s proposed 2026 Federal Budget reforms could represent a significant shift in property investing.

Much of the discussion has centred around changes to negative gearing and capital gains tax concessions, but beneath the headlines is the potential broader structural shift that may benefit the off-the-plan apartment market.

For Finbar (ASX:FRI), the announced policy measures are relevant because the company operates in the new apartment sector and the policy intent appears to be steering future investor demand toward the supply of new housing.

A Major Shift in Investor Behaviour Could Be Coming

For decades, established homes have dominated Australia’s investment market, supported by broad access to negative gearing and CGT concessions.

The proposed reforms may begin changing that dynamic.

Established residential investment properties acquired after Budget night would no longer attract the same ability to offset net rental losses against other income, such as salary or wages, while new builds would retain that treatment.

For assets other than new homes, the announced reforms would replace the existing 50% CGT discount with inflation-adjusted indexation for gains arising after 1 July 2027, while new builds would retain the ability to choose between the current 50% discount and the new indexation method.

By reducing the relative attractiveness of established investment properties while maintaining stronger incentives for new housing supply, the Government appears to be encouraging investors to allocate capital into newly constructed dwellings instead.

That distinction is relevant for apartment developers.

If implemented, these reforms could support investor interest in qualifying new-build apartments, including off-the-plan apartments and newly completed stock that satisfies the final eligibility criteria.

In other words, the future of property investing in Australia may become increasingly tied to the creation of new housing supply, not simply trading existing homes.

Potential Implications for Off-the-Plan Apartments

Australia’s housing shortage remains one of the country’s largest economic and political challenges.

Governments need more housing delivered quickly, efficiently, and at scale.

Apartments play a critical role in solving that problem.

Compared to established housing, apartment developments can:

• deliver significantly higher housing density;

• activate well-located urban land;

• support infrastructure investment;

• and create supply close to employment and lifestyle precincts.

As a result, policy settings increasingly appear aligned with encouraging this form of development.

For investors, off-the-plan apartments may become more attractive because if the policies are implemented as announced, they:

• may allow eligible investors in qualifying new builds to continue deducting net rental losses against other income, commonly referred to as negative gearing;

• give investors the ability to choose between the current 50% Capital Gains Tax discount, or use the new inflation indexation method proposed in the 2026 Federal Budget;

• offer access to currently high-demand markets with constrained supply;

• may qualify for Western Australian off-the-plan duty concessions, subject to eligibility criteria, timing, dwelling type and value thresholds;

• may be capable of being purchased by foreign investors, subject to FIRB approval, eligibility requirements, applicable fees, surcharges and any relevant foreign investment restrictions.

That potential shift could be relevant to demand for developers operating in the apartment sector.

Why This Matters for Finbar’s Future Pipeline

For listed developers, future pipeline depth becomes critically important in periods of change.

Companies with established development capability, approved projects, and strong delivery track records may be best positioned to capture any potential increase in demand.

Finbar’s longstanding presence in the Perth apartment market, established delivery capability, and extensive development pipeline mean the announced measures are relevant to the company’s operating environment.

Importantly, Perth also continues to benefit from several strong underlying fundamentals:

• a tight rental market;

• strong population growth;

• housing undersupply;

• and relative affordability in some market segments compared with larger eastern states markets.

The Future of Investing Could Look Very Different

The broader significance of these reforms may extend well beyond tax policy alone.

Australia’s property market has historically rewarded ownership of existing housing stock.

The next phase may increasingly reward investment that creates additional housing supply.

That is a very different investment environment.

In this emerging landscape:

• off-the-plan purchasing could become increasingly attractive to investors;

• and developers delivering new residential stock may play a much larger role in Australia’s investment economy.

Finbar’s role remains focused on delivering new apartment supply into markets where demand, feasibility and planning conditions support project commencement.

Disclaimer: This article is provided for general information only and comments on publicly announced government policy settings as at the date of publication. The proposed reforms remain subject to legislative process and may change. The potential implications for housing demand, investor behaviour and new apartment supply are uncertain and may be affected by a range of factors, including interest rates, lending conditions, construction costs, taxation settings, foreign investment rules, buyer confidence and broader economic conditions. This article does not constitute financial product advice, taxation advice, legal advice or a recommendation to buy, hold or sell Finbar securities or any property. Investors and purchasers should obtain their own independent professional advice.