If you own an investment property in Adelaide, or you were planning to buy one, the rules changed this year — and not at the edges. The tax reform package that received Royal Assent on 26 June 2026 does two things that reshape the economics of residential property investment in Australia: it quarantines negative gearing losses, and it replaces the 50% capital gains tax discount. Both start on 1 July 2027.
That gives Adelaide investors roughly eleven months to work out where they stand. This is a plain-English guide to what has actually been legislated, what is still in draft, and the South Australian land tax bill that catches people out long before any of the federal changes bite.
The two federal changes that matter
1. Negative gearing is being quarantined
From the 2027–28 income year, if your deductions on residential rental properties exceed your rental income, the excess is no longer deductible against your salary, your business income, your dividends or your commercial property income. It becomes a “quarantined amount” that can only be applied against income from residential dwellings.
The losses are not lost. They roll forward indefinitely, and they can be applied against residential rental income in later years and against capital gains on residential property when you eventually sell. But the annual tax refund that underpins a lot of Adelaide investment property cash flow — the one that arrives every October — stops for affected properties.
Two big carve-outs:
- Grandfathering. Properties where you last acquired your ownership interest before 7:30pm AEST on 12 May 2026 are excluded, with no end date. If you signed a contract before budget night but settled afterwards, you are still inside the exclusion.
- New builds. New residential dwellings are carved out entirely and keep ordinary negative gearing.
Commercial property and shares are untouched. So are complying superannuation funds — an SMSF holding residential property is outside the quarantining rule, though a separate change in the same Act restricts new limited recourse borrowing arrangements over real property to business real property, which closes off a common Adelaide strategy for buying residential property inside super.
2. The 50% CGT discount is being replaced
For capital gains accruing from 1 July 2027, individuals, trusts and partnerships lose the 50% discount. In its place: cost base indexation, plus a 30% minimum tax rate on net capital gains.
Indexation lifts your cost base in line with CPI, so you are taxed on the real gain rather than the inflationary one. That is genuinely better than the discount for a low-growth asset held a long time, and materially worse for a strongly appreciating one — which describes a lot of Adelaide property over the past five years. Note that the third element of the cost base, the ongoing holding costs like rates, insurance and interest, is not indexed.
The 30% minimum rate works as a top-up rather than a flat rate. If the gain is already taxed at an effective rate of 30% or more at your marginal rates, nothing extra is payable. If it is taxed below 30%, you pay the difference. There are exemptions for recipients of Age Pension, JobSeeker, Disability Support Pension and similar payments.
Superannuation funds keep the 33⅓% discount. Companies are unchanged. The main residence exemption is unchanged — your own home is still exempt.
The 1 July 2027 reset nobody is talking about yet
This is the part Adelaide investors most often miss when they first read about the reforms. The legislation deems every CGT asset you hold on 30 June 2027 to be sold at market value and immediately reacquired on 1 July 2027.
There is no tax bill on that date. The notional gain is deferred until you actually sell, and it keeps its 50% discount treatment. Everything that accrues from 1 July 2027 onwards falls under indexation and the 30% floor.
The practical consequence is a records problem. Every Adelaide property investor will need defensible evidence of what their properties were worth at 30 June 2027. An alternative apportionment method is proposed for real property, but the determination setting it out is still only an exposure draft. If you own investment property, a written appraisal or valuation around 30 June 2027 is cheap insurance.
One quiet but significant side effect: assets acquired before 20 September 1985 lose their pre-CGT status on 1 July 2027. Growth up to that date stays exempt, but from then on they are inside the CGT net. For Adelaide families holding long-held land or a farm through a company or trust, that is worth a conversation now.
If you already own an Adelaide investment property
Your position is probably better than the headlines suggest. Grandfathering attaches to the ownership interest, not to you personally, and it has no expiry date. Hold the property and nothing changes for negative gearing.
What can break it is anything that amounts to a fresh acquisition after 12 May 2026 — transferring the property into a family trust, restructuring ownership between spouses, or adding a partner to the title. Refinancing should not affect it, because the test is about acquiring the ownership interest rather than the loan behind it.
Inherited property and relationship breakdowns sit in a gap. The Act does not say whether a beneficiary who inherits a grandfathered property steps into the deceased’s acquisition date or acquires afresh. The government’s second tranche of draft legislation proposes to preserve grandfathering for inheritances, joint tenancies and former-spouse settlements — but as we write this, that is a draft, not law. If an estate or a property settlement is in front of you right now, get advice before anything is transferred.
If you are thinking about buying
The arithmetic now differs sharply between new and established stock. A new build in a growth corridor keeps full negative gearing permanently; the same money spent on an established home in an established Adelaide suburb does not, for any purchase after 12 May 2026.
The catch is that “new residential dwelling” is not defined in the Act at all. It depends on a ministerial determination that has not yet been made. The draft proposes a dwelling acquired within 24 months of a certificate of occupancy, and indicates that knock-down rebuilds and substantial renovations that do not increase the number of dwellings will not qualify. There is also unresolved debate about whether the concession follows a second purchaser. Do not commit to a purchase on the strength of the new-build carve-out until the determination is registered.
South Australian land tax — the bill people forget
Long before any of this, most Adelaide investors meet land tax. For 2026–27 the thresholds were indexed but the rates were not changed:
- Nil up to $936,000 of total taxable site value
- 0.50% on the portion above $936,000, rising through 1.00% and 2.00%
- 2.40% on the portion above $3,504,000
Two things catch people. The first is aggregation: since 2020–21 South Australia adds up all the land you own, including your proportionate share of jointly held land and land held through related companies. Two modest Adelaide rentals held separately can produce a bill that neither would trigger alone.
The second is the trust rate. Land held on trust is assessed on a scale that starts at just $25,000 rather than $936,000, unless you have notified RevenueSA of beneficial interests or unitholdings. The window to nominate a designated beneficiary for discretionary trusts holding land at October 2019 closed on 30 June 2021 and has not reopened. If you are weighing up buying in a trust, model the land tax before you sign — it frequently outweighs the income tax benefit.
On stamp duty, South Australia offers investors nothing. Full duty applies, topping out at $21,330 plus $5.50 per $100 above $500,000. The first home buyer exemption is uncapped but applies only to new homes, off-the-plan apartments and vacant land, and requires you to live there — so it is unavailable on an investment purchase. Foreign purchasers pay a further 7% surcharge.
The deductions Adelaide investors still get wrong
None of the older restrictions were repealed. They still apply, and they bite before quarantining does:
- Travel to your rental property is not deductible for individuals, and has not been since 1 July 2017. Driving from Adelaide to check on a Victor Harbor rental is a private cost.
- Second-hand depreciating assets are not deductible where the property was acquired after 9 May 2017. The dishwasher and blinds that came with an established home give you nothing, though a quantity surveyor’s schedule for capital works is usually still worth getting.
- Vacant land holding costs are not deductible from 1 July 2019 unless there is a substantial and permanent structure on it or it is used in a business.
- Repairs versus improvements. Fixing a broken fence is deductible now; replacing the whole fence is capital. This remains one of the most common adjustments we see on Adelaide rental schedules.
- Interest apportionment. If you have redrawn on an investment loan for private purposes, the interest on that portion is not deductible — regardless of which loan it sits in.
What to do between now and 30 June 2027
- Confirm, in writing, which of your properties are grandfathered and which are not.
- Do not transfer or restructure ownership of a grandfathered property without modelling what it costs you.
- Get evidence of market value for every investment property as at 30 June 2027.
- Model your cash flow from 2027–28 on the assumption that non-grandfathered losses give you no annual refund.
- If a sale is on the cards, look hard at whether it belongs before or after 1 July 2027 — the answer is not automatic either way.
- Review any trust or SMSF property holdings against both the new rules and South Australian land tax.
Talk to an Adelaide accountant who works with property
These are the biggest changes to property taxation in Australia since 1999, and a meaningful part of the detail is still sitting in draft instruments. Anyone giving you a confident answer on new builds, inherited properties or apportionment right now is going further than the law currently allows.
At Nitschke Nancarrow we work with property investors across Adelaide and South Australia — from a first rental in the eastern suburbs to portfolios held through trusts and self managed super funds. If you want to know where you actually stand before 1 July 2027, get in touch, or read more about our property investment accounting services and tax services.
If your property is held inside super, our guides to whether an SMSF is right for you and the new Division 296 super tax cover the other half of the picture, along with our SMSF services.
This article is general information only and does not take into account your objectives, financial situation or needs. It reflects the law and draft legislation as at August 2026, and several key elements remain subject to change. You should seek advice specific to your circumstances before acting.
