24th of June 2026<\/p>\n\n\n\n
The Federal Government has confirmed that investment properties jointly owned before the May Federal Budget may lose their grandfathered capital gains tax (CGT) and negative gearing concessions if ownership changes because of the death of a spouse or a divorce settlement.<\/p>\n\n\n\n
The clarification appears in the Government’s budget legislation, which Labor and the Greens are seeking to pass through the Senate. While the reforms were initially promoted as preserving existing tax arrangements for investment properties purchased before the Budget announcement, the legislation reveals that these protections may no longer apply when ownership is transferred between joint owners.<\/p>\n\n\n\n
This issue has attracted significant attention, with Independent Senator David Pocock raising concerns that the measure could unfairly disadvantage Australians who unexpectedly become sole owners of an investment property following the death of a partner or the breakdown of a relationship.<\/p>\n\n\n\n
Under the proposed legislation, investment properties that were negatively geared before Budget night will generally retain access to negative gearing beyond the commencement of the new rules on 1 July 2027. Likewise, properties owned before the Budget will continue to qualify for the existing 50 per cent CGT discount until 1 July next year. After that date, any future capital gains will instead be calculated using a new inflation-based methodology.<\/p>\n\n\n\n
However, Treasury officials confirmed during parliamentary hearings that these grandfathering provisions would cease to apply to the transferred ownership interest if a jointly owned property changes hands. This means the surviving spouse or former partner who becomes the sole owner may lose access to the original CGT concessions and negative gearing treatment for the portion of the property they acquire.<\/p>\n\n\n\n
Treasurer Jim Chalmers defended the approach, stating that the treatment is consistent with existing capital gains tax rules governing asset acquisitions and ownership transfers. According to the Government, when ownership changes, the tax system treats the acquiring owner as having obtained a new interest in the asset, meaning the grandfathering provisions no longer apply to that portion.<\/p>\n\n\n\n
Finance Minister Katy Gallagher also supported the legislation, arguing that it aligns with long-standing CGT principles already embedded within Australia’s taxation framework.<\/p>\n\n\n\n
Senator Pocock has challenged this reasoning, arguing that the comparison overlooks an important distinction. Under current tax rules, transfers resulting from death or relationship breakdown generally preserve access to the existing 50 per cent CGT discount. Under the proposed reforms, however, the surviving or remaining owner could lose the grandfathered concessions despite simply continuing ownership of the same investment property.<\/p>\n\n\n\n
Pocock has described the measure as an unintended consequence of legislation being rushed through Parliament. He has expressed particular concern that the changes could disproportionately impact women, who statistically are more likely to outlive their spouses or receive investment properties following family law settlements.<\/p>\n\n\n\n
To address these concerns, Senator Pocock has proposed amendments that would preserve the grandfathered CGT and negative gearing concessions where ownership changes occur due to the death of a joint tenant or as a result of Family Court orders. His proposal would allow the new owner to continue applying the same tax concessions that existed immediately before the ownership transfer.<\/p>\n\n\n\n
Despite these concerns, the amendments face an uncertain future. With Labor and the Greens holding sufficient numbers in the Senate, the Government is expected to have the votes necessary to pass the legislation unless it agrees to modify the bill.<\/p>\n\n\n\n
The proposed reforms highlight the importance of considering how tax legislation can affect long-term investment strategies and estate planning. Many property investors have structured their affairs based on existing tax rules, and changes affecting surviving spouses or divorced couples could significantly alter future tax outcomes.<\/p>\n\n\n\n
Investors who jointly own investment properties should monitor the progress of the legislation closely and consider seeking professional financial and taxation advice. Estate plans, ownership structures and long-term investment strategies may need to be reviewed to ensure they remain appropriate if the proposed changes become law.<\/p>\n\n\n\n
As the legislation progresses through Parliament, further clarification may emerge regarding how these provisions will operate in practice. Until then, property investors should remain informed and prepared for potential changes that could have lasting financial implications for themselves and their families.<\/p>\n\n\n\n
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24th of June 2026 The Federal Government has confirmed that investment properties jointly owned before the May Federal Budget may lose their grandfathered capital gains tax (CGT) and negative gearing concessions if ownership changes because of the death of a spouse or a divorce settlement. The clarification appears in the Government’s budget legislation, which Labor […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"footnotes":""},"class_list":["post-438","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/pages\/438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=438"}],"version-history":[{"count":1,"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/pages\/438\/revisions"}],"predecessor-version":[{"id":439,"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=\/wp\/v2\/pages\/438\/revisions\/439"}],"wp:attachment":[{"href":"https:\/\/larrenduke.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}