Post-Budget Property Investing: What the 2026 Changes Mean for Borrowing Power, Negative Gearing and Portfolio Growth

Federal budgets often create headlines, uncertainty, and strong opinions.

For property investors, however, the most important question is usually much simpler:

How will these changes affect my ability to borrow, invest, and build wealth?

In this episode of the Property Nerds Podcast, Arjun Paliwal and Jack Fouracre unpacked the key property-related budget announcements, explored how lenders may respond, and discussed why periods of uncertainty often create opportunities for informed investors.

While much of the public discussion has focused on tax changes, the episode highlighted a different perspective: property remains a game of finance, and understanding lending dynamics may be more important than understanding political narratives.

What Happened

The discussion focused on the major property and taxation proposals announced in the Federal Budget, including changes to capital gains tax calculations, negative gearing treatment, family trust taxation, and the ongoing distinction between new and established property investments.

Arjun provided a practical breakdown of how these proposed changes may affect investors, while Jack focused on the lending implications that could follow if banks adjust their servicing policies.

A major theme throughout the conversation was that uncertainty often creates hesitation in the market. Historically, those periods have also created opportunities for investors who understand the underlying fundamentals and act before confidence returns.

Key Findings

1. Negative gearing is changing, but not disappearing

One of the biggest talking points from the budget was the proposed change to negative gearing.

Under the proposed system, investors who purchased established properties before the announced cut-off date would continue operating under the existing rules.

For future purchases, negative gearing would still exist, but the tax benefit would become deferred rather than immediately claimable after July 2027.

Rather than receiving annual tax refunds from negatively geared losses, investors would accumulate those deductions and use them against future positive cash flow or taxable gains.

The discussion highlighted that the benefit remains available, but the timing changes significantly.

2. Borrowing power could become the biggest issue

While much of the public conversation focuses on tax outcomes, lenders often focus on servicing calculations.

If major lenders stop recognising negative gearing benefits within their calculators, borrowing capacity for some investors could fall materially.

During the episode, Jack estimated that borrowing power reductions could potentially approach 30% under current servicing models if negative gearing benefits were completely removed from assessment calculations.

Although lenders may adapt their policies over time, investors currently sitting on borrowing capacity may face a different lending environment in the future.

3. Banks have several ways to offset servicing impacts

The conversation explored how lenders may respond if the proposed changes proceed.

Potential adjustments include:

• Extending loan terms.

• Reducing assessment rate buffers.

• Increasing the percentage of rental income used in servicing calculations.

• Adapting lending policies to reflect changing market conditions.

The key takeaway was that while borrowing capacity may initially tighten, lenders have multiple tools available to remain competitive and maintain market share.

4. Low sentiment often creates buying opportunities

One of the strongest themes from the episode was the relationship between market sentiment and opportunity.

Arjun reflected on previous periods of uncertainty, including:

• The 2018–2019 negative gearing debate.

• COVID-19 disruptions in 2020.

• Interest rate increases during 2022 and 2023.

In each case, uncertainty reduced competition and created opportunities for buyers willing to act while others waited.

The discussion suggested that today's environment may present a similar dynamic, where hesitation among investors creates more favourable purchasing conditions.

5. Rental markets may tighten further

If fewer investors purchase established properties, rental supply could become even more constrained.

The episode explored how reduced investment activity may place additional pressure on already tight rental markets.

This could result in:

• Lower vacancy rates.

• Higher rental growth.

• Improved rental yields over time.

For long-term investors, stronger rental performance may help offset some of the impacts associated with taxation changes.

6. Family trusts remain relevant for many investors

A common reaction to the budget was the suggestion that family trusts may no longer be worthwhile.

However, the discussion argued that trusts still offer significant advantages from a lending and portfolio structure perspective.

While some tax efficiencies may be reduced, trusts can continue providing:

• Debt separation benefits.

• Portfolio scalability.

• Lending flexibility.

• Asset ownership diversification.

For many investors, lending outcomes remain more important than maximising tax minimisation strategies.

7. Companies may become more attractive for some business owners

The episode also explored circumstances where company ownership structures may become more appealing.

Business owners with trading entities and stronger cash flow flexibility may benefit from additional structuring options that are less accessible to PAYG investors.

However, the discussion emphasised that taxation decisions should not be made in isolation.

Investment structures should be evaluated through both a tax and lending lens to ensure they support long-term portfolio goals.

8. Property strategy should drive structure decisions

One of the most practical takeaways from the episode was that different investors require different structures.

Someone purchasing one or two properties to support retirement may have very different needs compared to an investor planning to build a large portfolio.

The discussion outlined three broad categories:

• Investors beginning their journey.

• Investors nearing completion of their portfolio goals.

• Investors intending to scale aggressively over time.

Each group may require a different ownership structure, lending strategy, and risk framework.

Action Steps

If you're considering property investment following the budget announcements, focus on the fundamentals rather than the headlines.

• Review how the proposed changes may impact your personal borrowing capacity.

• Speak with both your accountant and mortgage broker before making structural decisions.

• Understand the difference between tax strategy and lending strategy.

• Assess whether your current pre-approval remains appropriate under changing policies.

• Consider how future rental growth may influence long-term portfolio performance.

• Evaluate ownership structures based on your goals, not solely on tax outcomes.

• Avoid making decisions based on uncertainty alone.

Periods of market hesitation often create opportunities for investors who remain informed and focused on long-term fundamentals. Understanding how lending, taxation, and portfolio strategy work together will become increasingly important as the market adapts to the proposed changes.

We've also prepared a Masterclass, where we unpacked the data behind current market conditions, where capital growth is still on the table, and why conventional wisdom is leading everyday investors astray. Click here to watch.

If you'd like help building a property strategy that aligns with your borrowing capacity, investment goals, and long-term wealth plan, book a discovery call with InvestorKit.