If you own an investment property, or you’re thinking about purchasing one, chances are you’ve seen headlines surrounding the Federal Budget’s proposed changes to negative gearing and Capital Gains Tax.
While the tax reforms are not due to take effect until July 2027, they are already prompting plenty of questions from Perth investors.
At Keevers Group, we’re starting to see investors asking:
Here’s a simple breakdown of what’s been proposed, and what it could mean locally.
The Federal Budget announced two major Australian property market tax changes:
Importantly, existing investment properties would be “grandfathered”, meaning current owners could continue operating under the existing rules.
There is also currently a proposed grace period until 1 July 2027 for investors purchasing before the changes begin.
Negative gearing happens when the costs of owning an investment property are higher than the rental income it generates.
For example:
That $200 shortfall can currently be deducted from an investor’s taxable income.
Historically, this has encouraged investment into the property market, particularly in growth-focused markets where investors are banking on long-term capital growth rather than immediate cash flow.
Perth’s property market operates quite differently to Sydney and Melbourne.
Compared to eastern states, Perth has traditionally offered:
That means many WA investors already prioritise rental returns and long-term fundamentals, not just tax benefits.
For some investors, the proposed changes may influence future purchasing decisions. But for others, Perth’s relatively strong rental conditions may continue to make property investment attractive regardless of tax settings.
One of the biggest proposed shifts is likely to be where investor demand goes.
Under the proposed changes:
This could encourage more investors toward:
However, tax incentives alone don’t guarantee a good investment.
Location, rental demand, quality of construction, ongoing maintenance costs and long-term buyer appeal still matter just as much.
We may also see investors continue favouring established homes in tightly held coastal or lifestyle suburbs where supply remains limited.
One of the biggest conversations surrounding the proposed changes is rental supply.
According to the Federal Budget overview, around 83% of renters currently rent from private investors.
If fewer investors purchase established properties in future, the long-term concern becomes:
This is especially relevant in Perth, where rental vacancy rates remain extremely tight in many established suburbs.
While grandfathering provisions reduce the likelihood of a sudden investor sell-off, the longer-term effects on rental supply are still uncertain.
While the proposed changes are still some time away, we are already seeing Perth investors starting to explore their options.
Some are considering:
Others are simply waiting to see how the market responds before making decisions.
As always, every investor’s circumstances are different and tax policy is only one piece of the puzzle.
At the end of the day, strong property markets are still driven by fundamentals:
Tax settings can influence investor behaviour, but they don’t completely override market fundamentals.
Perth’s affordability relative to other capital cities, combined with ongoing rental pressure, continues to keep many investors focused on the WA market.
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