May 2026
Well, that must have been the most watched Federal Budget ever. It was on every station live at 7.30. Families would have timed their dinner around it. The collective eyeballs watching would have numbered more than a mid week State of Origin final.
And plenty of investors would have been nervous. Leading up to the budget, there was a lot of talk about how it was game over for property investors.
Halfway through his reading of the Budget, the mild mannered Treasurer got to the bit investors were worried about – housing. He softened the audience by putting forward the very reasonable proposition that the government wanted to incentivise people to add to the housing supply.
And then came …. the good news.
We’ll look below at why investors breathed a collective sigh of relief at around 7.50pm last Tuesday.
And we’ll look at what the ATO has in its sights this year.
We have a list of deductible expenses to help you get organised before you see your accountant.
And a few things to be wary of.
If you’ve been waiting for the budget fall out to organise a Depreciation Schedule for a new property, now is the time to get started. You can make an enquiry online or call our team on 1300660033.
Key Points
- 1. There was some good news from the budget for property investors this year. Nothing has changed for properties you already own, commercial properties or properties held in your SMSF. Read on for our full analysis.
- 2. The ATO is focused on property investors claiming deductions correctly again this year. Make sure you’re keeping good records of your expenses.
- 3. Check out our handy checklist of property related tax deductions to help prepare for your appointment with your accountant this year.
- 4. Beware of AI hallucinations if you’re looking for financial advice online. The best place to seek advice? Your accountant or financial advisor.
The surprise good news from the budget last week
Where do we start? There is so much.
First of all, the ‘grandfathering’ – a term that has prevailed despite some people saying it is ageist.
It’s business as usual for people with properties currently negatively geared. Those people may decide to hang onto those properties longer than they were planning to.
Some of those people right now will be working on plans to increase the debt on their negatively geared properties to use that money to invest in more property – perhaps positively geared property where capital growth is the aim.
And given SMSFs can still negatively gear second hand properties, there will be a lot of people thinking about starting an SMSF – and plenty of companies eager to help them.
Commercial properties were not even mentioned – residential supply is where the government is focussed.
So let’s look at that supply. Brand new apartments can be negatively geared, as can houses built on greenfield sites.
If you do a knock down and rebuild, you need to build a duplex to be able to negatively gear it i.e. you are replacing one dwelling with two. Duplexes now make even more sense. They have always been a great property play; you have two tenants to spread the risk and much higher depreciation.
The granny flat strategy is alive and well, but to be negatively geared they need to be built in the backyard of a property already eligible to be negatively geared. There will be plenty of people who have been contemplating doing this with a property they already own, so happy days for them – and for granny flat builders.
And those properties where losses are now not able to be claimed? For starters, they will be claimable until July 1, 2027. After that, those properties will be neutrally geared – nothing wrong with that.
But even better, any notional losses can be carried forward and used in the future against property income. That is something a lot of people are not aware of.
In short, the Treasurer has managed to incentivise new investors to increase housing supply without disenfranchising those currently invested.
Phew.
What is the ATO watching out for this year?
This is the time of year when the ATO kindly lets people know that they are watching.
Always watching.
Short term rental platforms already have to report gross rent to the ATO on behalf of clients.
But the ATO is doing its best to capture ‘casual arrangements’ where someone may rent out part of a property below market rates to family or friends. They’re not keen on that.
They are equally unhappy about people with holiday homes using them for private purposes while still claiming 100% of the available deductions.
And there is the perennial problem of people confusing repairs and improvements. We write about this often, most recently here.
Keeping very good records is the key.
Handy checklist of property related tax deductions
We have a handy checklist of Property-Related-Tax-Deductions to help you prepare for your appointment with your accountant.
The more organised you are, the happier your accountant will be. And a happy accountant is always a good thing!
Beware AI ‘Hallucinations’ when looking for financial advice
An interesting thing happened straight after the Budget last week.
Apparently there was a spike in people asking questions of ChatGPT about whether they can still claim negative gearing and what the changes to CGT were.
Chat GPT draws on sources on the internet and it took a little while for much Budget commentary to make it online. And Chat GPT doesn’t like to NOT have an answer, so it casts a desperately wide net, God love it, and threw up some incorrect answers.
They call these ‘hallucinations’. They’re AI answers that seem utterly believable, but are nonsense. You can read more on this here.
Chat GPT is increasingly where people, mostly younger people, are getting their news and information.
Then there are the ‘Finfluencers’. They are found in TikTok and Instagram and Facebook spruiking products and strategies and being paid for their efforts. We have written about this before here.
Do they understand what they are promoting? Often not.
Do they care? Nah.
If you’re looking for reliable information, speak to your accountant or financial advisor. They understand your financial situation, and the rules that govern our tax system, far better than AI or a finfluencer does.
Do you have a residential or commercial property you would like us to help you claim depreciation for? Or a question about depreciation?
Order online now or call us on 1300 660 033 and rely on our 20-plus years of experience in estimating depreciation returns.
