Australia 2026-27 Federal Budget: Housing & Property

Australia 2026-27 federal budget housing and property

The 2026-27 Federal Budget, handed down on 12 May 2026, delivers the most substantial housing and property reform package in a generation. Key measures include an $800 million expansion of Help to Buy with higher income and price caps, unlimited First Home Guarantee places with no income limits, a $10 billion First Home Buyer Exclusive Housing program delivering 100,000 homes over 10 years, and landmark structural changes to negative gearing and capital gains tax commencing in July 2027.

Data in this article is sourced from the 2026-27 Budget papers, Treasury, Housing Australia, and Services Australia as at 5 July 2026.

Help to Buy: $800 million expansion

The Help to Buy shared equity scheme received approximately $800 million in additional funding, expanding both income thresholds and property price caps.

New income thresholds (from 1 July 2026)

Single applicants: $103,000 (up from $100,000)
Single parents: $165,000 (up from $160,000)
Joint applicants: $165,000 (up from $160,000)

Expected property price caps

Price caps are set by policy decision and are expected to rise to approximately:

NSW: $1.4 million
VIC: $1.0 million
QLD: $1.0 million

The government co-purchases up to 40% of the home, requiring the buyer to contribute only a 2% deposit and finance 60% through a standard loan. The CSP adjustment threshold for home improvements rises to $21,000.

First Home Guarantee: uncapped and unrestricted

The reforms implemented on 1 October 2025 remain in effect and represent the most generous iteration of the scheme:

No cap on places (previously 35,000 per year)
No income caps (previously $125,000 single / $200,000 joint)
Higher property price caps: Sydney $900,000, Melbourne $800,000, Brisbane $700,000, Perth $600,000, Adelaide $600,000, Hobart $600,000, ACT $750,000, NT $600,000
5% minimum deposit with no LMI, available through 32 participating lenders
Australian citizens only (not permanent residents)

$10 billion First Home Buyer Exclusive Housing program

The Budget's most ambitious new housing initiative is a $10 billion program to deliver 100,000 homes over a decade, sold exclusively to first home buyers at below-market prices. The first projects are expected to start construction in 2026-27. This program is distinct from both Help to Buy and the First Home Guarantee — it involves direct government procurement and supply of housing rather than financial assistance or guarantees.

Housing Australia Future Fund: Round 3

The HAFF's Round 3 targets the remaining 21,350 homes needed to reach the 40,000-home target by 2029, building on the 18,650 already committed across 279 contracts in Rounds 1 and 2. The four-stream approach includes:

$600 million First Nations stream with new Concierge Service
Housing Diversity stream targeting 3,750 dwellings
State and Territory Government stream for social housing
Partnerships at Scale stream for 8,000 affordable dwellings via institutional investors

The National Housing Accord target of 1.2 million homes by 2029 is tracking behind schedule, and all social and affordable housing funding products are being consolidated under the single HAFF brand.

Negative gearing and CGT: the 2027 transition

The Budget confirmed the structural changes to property taxation announced previously:

Negative gearing quarantining (from 1 July 2027)

Rental losses on established property acquired after 7:30 PM AEST 12 May 2026 can only offset rental income or residential property CGT. Pre-cutoff properties are grandfathered. New builds, SMSFs, build-to-rent, and widely held trusts are exempt. First investor purchasers of new builds retain full negative gearing.

CGT discount replacement (from 1 July 2027)

The 50% CGT discount is replaced by cost base indexation with a 30% minimum tax floor. Pre-CGT assets (acquired before 19 September 1985) are brought into the net for post-July 2027 gains. First investor purchasers of new builds can elect between the old and new methods.

Discretionary trust minimum tax (from 1 July 2028)

A 30% minimum tax on distributed trust income, with a restructure rollover window from 1 July 2027 to 30 June 2030. Exemptions for primary production income, vulnerable minors, and pre-12 May 2026 testamentary trusts.

Build-to-Rent and foreign investment

Build-to-Rent incentives

The Budget maintains and builds on existing BTR tax incentives:

MIT withholding rate halved from 30% to 15% for eligible funds
Accelerated capital works deduction at 4% per annum (versus 2.5% standard)
Target of 80,000 BTR dwellings, with 5-year lease mandates
Amended affordability rules from 27 March 2026 strengthen the lower-income dwelling requirement

Foreign investment ban extended

The ban on foreign purchases of established dwellings was extended by 2 years and 3 months to 30 June 2029. FIRB fees remain substantial and enforcement has intensified, with approximately 300 divestment orders in 2024-25.

Commonwealth Rent Assistance

The 15% increase to CRA maximum rates took effect on 20 March 2026, with new maximum fortnightly rates:

Single, no children: $212.40
Single sharer: $141.60
Couple: $200.20
Single with 1-2 children: $248.15

This is the third boost in as many years, following 15% in September 2023 and 10% in September 2024, targeting rental stress in markets with vacancy rates as low as 0.8%.

FAQ

What is the biggest housing announcement in the 2026-27 Budget?

The $10 billion First Home Buyer Exclusive Housing program — 100,000 homes over 10 years sold exclusively to first home buyers at below-market prices. The first projects start construction in 2026-27.

How does the First Home Guarantee differ from Help to Buy?

FHG is a government guarantee allowing a 5% deposit with no LMI — you own 100%. Help to Buy is shared equity — the government co-owns up to 40% and you need only a 2% deposit. Both have different income and price cap rules.

Are there still income caps for the First Home Guarantee?

No. The income caps of $125,000 (single) and $200,000 (joint) were removed on 1 October 2025. The only eligibility requirements are Australian citizenship, being 18+, no prior property ownership, and intending to live in the property.

When do the negative gearing changes take effect?

1 July 2027. Properties with contracts signed before 7:30 PM AEST 12 May 2026 are grandfathered. Properties acquired after this date can still negatively gear against all income until 30 June 2027, then losses are quarantined.

Can permanent residents access the First Home Guarantee?

No. The scheme requires Australian citizenship. Permanent residents can access state-based schemes and may be eligible for Help to Buy.