Australia's 2026 Federal Budget — What Every Nepali Needs to Know

On 12 May 2026, Treasurer Jim Chalmers delivered what is being called the most significant budget in a decade. The headline changes — restricting negative gearing to new homes only and abolishing the 50% capital gains tax discount — have reshaped Australia's property investment landscape overnight. For Nepalis across Australia, whether you rent, work, invest, or are trying to buy your first home, something in this budget affects you. Here's the plain-English breakdown.

The two biggest changes: negative gearing and CGT

Negative gearing — the practice of deducting rental losses against your income — has been a cornerstone of Australian property investment for decades. From 1 July 2027, you will only be able to negatively gear a residential property if it is a new build. Established (existing) properties purchased after the budget announcement can no longer be negatively geared. Properties already owned and negatively geared before budget night are grandfathered — you keep the deduction on those existing holdings.

The second change is to the capital gains tax (CGT) discount. Currently, if you hold an investment asset for more than 12 months, you only pay tax on 50% of your capital gain. From 1 July 2027, that 50% discount is replaced with two alternatives: cost base indexation (adjusting your purchase price for inflation), or a 30% minimum tax rate on the real gain — whichever is more favourable. In practice, this means most property investors will pay significantly more CGT on future sales of established properties.

What this means if you own an investment property

• →Existing negatively geared property (bought before 12 May 2026): Grandfathered — your deductions are preserved. No action required, but check with your accountant.
• →New investment property (bought after 12 May 2026, established home): Negative gearing no longer applies from 1 July 2027. Your holding costs will not be fully deductible against other income.
• →New investment property (new build, bought after 12 May 2026): Negative gearing still applies. New builds are exempt from the restriction — this is the government's incentive to boost housing supply.
• →Selling an investment property after 1 July 2027: The 50% CGT discount is gone. You will pay tax on the full real gain (adjusted for inflation), subject to a 30% minimum rate.
• →Family trusts: The budget also included changes to trust income distribution, which affects Nepali families who hold property or business assets through family trusts. Speak to a tax accountant about this specifically.

First home buyers — the government's intended winners

The government's argument for these tax reforms is that restricting investor tax breaks will reduce investor competition for established homes, creating more opportunity for first home buyers. Treasury modelling estimates the changes will help 75,000 Australians buy their first home over the next decade. The Help to Buy shared equity scheme — where the government co-owns up to 40% of a new home and 30% of an established home with you — has also been expanded and funded in this budget.

For Nepalis aiming for their first home, the combination of reduced investor competition in the established property market and the expanded Help to Buy scheme is a genuine opportunity. If you are on a permanent residency or citizenship and meet the income and property price caps, Help to Buy could significantly reduce the deposit and mortgage you need.

Workers — the $250 tax offset

More than 13 million working Australians will receive a $250 Working Australians Tax Offset starting in the 2027-28 financial year. This is an ongoing annual offset — not a one-off payment — applied automatically through the tax system. There is also a $1,000 instant deduction for work-related expenses, available without needing to keep receipts, from the same year.

For Nepali workers — particularly those on temporary graduate visas (subclass 485), skilled worker visas (482), or who have recently gained permanent residency — these offsets reduce your annual tax bill without requiring you to do anything extra. They are applied when you lodge your tax return.

Renters — what to expect

The immediate concern for many Nepalis — the majority of whom rent — is whether these property tax changes will cause landlords to raise rents or exit the market. Treasury's official modelling is clear: the expected rent increase from the CGT and negative gearing changes is less than $2 per week for a household paying median rent. This is because most rental supply comes from property investors who already hold established homes (grandfathered), and new supply from new builds (still fully tax-advantaged) is expected to offset any reduction in investor activity.

Commonwealth Rent Assistance — available to eligible permanent residents and citizens on low incomes — is unchanged and continues to be indexed to rent increases.

Migration — no change from this budget

Despite the ongoing political debate about migration cuts (which we covered in our previous post), the 2026-27 Budget maintained the skilled migration program at 185,000 places, with more than 70% in the skill stream. The budget also committed AUD 85.2 million to accelerate skills assessments for migrant workers — reducing waiting times by up to six months for an additional 4,000 skilled workers per year.

Key dates to put in your calendar

• →12 May 2026 (budget night): Negative gearing restriction on established properties applies from this date for new purchases.
• →1 July 2026: Some minor cost-of-living measures begin.
• →1 July 2027: Negative gearing restriction and CGT discount changes take full effect. The $250 Working Australians Tax Offset and $1,000 instant deduction also begin.
• →2027-28 tax return: First time you will claim the $250 offset and $1,000 instant deduction.