Fundamentals Over Tax Structure: Why The Budget Changes Don’t Change Our Strategy
When the 2026 Federal Budget restricted negative gearing to new builds only and replaced the CGT discount with inflation indexation, the investment property industry reacted with predictable urgency. Panic. Pivots. A scramble to reframe what was and wasn’t worth buying. CH Secure’s strategy did not change. The reason is straightforward: it was never built on tax structure in the first place.
The four fundamentals we use to assess every acquisition are yield, growth, supply and demand. Not deductions. Not loss offsetting. Not tax-time cash flow engineering. Those can sit on top of a well-chosen property. They are not a substitute for choosing one well.
Joshua Meli’s Read on the 2026 Budget Changes
Co-founder and Director of CH Secure Joshua Meli – “We work with clients who buy inside company structures, where negative gearing against personal income is not available from day one. Every deal has to perform on its own fundamentals. That discipline is not a constraint. It is the lens that filters out marginal assets from durable ones.”
A recent example illustrates the point clearly.
A young Sydney family came to CH Secure holding a company-structured portfolio. We sourced three residential properties across 2024 and early 2025. Two outer-metro, one regional, each selected for tight supply, owner-occupier demand, infrastructure tailwinds, and a price-to-rent ratio that made sense without any tax assistance.
Combined purchase price: $2.26 million.
Three properties in, the cash flow position was slightly negative. Rather than accept that position, we added a higher-yielding asset to correct it: a multi-unit residential property with four dwellings on one title, $95,440 per year in rent, and a 9.6% gross yield. That income offset the negative position across the rest of the portfolio and brought the whole structure into serviceable territory.
Fifteen Months Later
The portfolio sits at $3.75 million against a $3.24 million total purchase price. That is $504,000 in capital growth. No negative gearing claimed. No personal tax losses offset against income. Just fundamentals. The 2026 Budget changes will reshape some investment decisions. They will affect investors who relied on deduction stacking as the primary investment thesis. For a portfolio built on yield, growth, and supply and demand, the Budget changed very little. The rules change. The fundamentals do not.
CH Secure is a Buyer’s Agency. We do not provide financial, tax or structuring advice. Always speak with a qualified accountant before making any property investment decision.
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FAQ
The 2026 Budget restricted negative gearing to new builds only from 1 July 2027, and replaced the 50% CGT discount with CPI indexation and a minimum 30% tax on real gains. For investors who built their strategy around deduction stacking and negative gearing, the changes are significant. For investors who buy on fundamentals, including yield, growth, supply and demand, the impact is far more limited. The underlying economics of well-located, well-priced residential property have not changed.
Yes. Negative gearing was never the reason well-chosen properties produced strong returns. Capital growth in tight-supply markets, rental income in high-demand areas, and the long-term compounding effect of holding quality assets all operate independently of the tax treatment applied to short-term cash flow losses. Investors who bought on fundamentals rather than tax structure were already managing this way.
When property is held in a company, losses cannot be offset against the personal income of individual shareholders in the same way they can for individuals or trusts. This means properties held in a company must perform on their own economics from day one. It is a discipline that focuses buying decisions on genuine yield and growth potential rather than tax-assisted cash flow.
CH Secure assesses every acquisition against yield, growth, supply and demand. Yield measures the income the property produces relative to its purchase price. Growth reflects the long-term capital appreciation potential of the location. Supply and demand analysis identifies whether the market has structural constraints that support price appreciation over time. These fundamentals apply regardless of the tax environment in any given year.
Yes, with the right approach. The changes affect the short-term cash flow position of some strategies more than others. They do not change the long-term case for property in locations with strong demand, limited supply, and income-producing characteristics. Working with a buyer’s agent who focuses on asset quality rather than tax optimisation is now more relevant, not less.