It is hard to ignore the noise right now. As we head into the thick of April 2026, the chatter around the upcoming May budget is reaching a fever pitch. If you have been keeping an eye on the news – or your LinkedIn feed – you have likely seen the headlines about the proposed tax shake-ups. For high-income professionals, these are not just “political talking points” – they are changes that could fundamentally shift how you manage your property portfolio and your mortgage strategy.
At Stellar Finance Group, we have been fielding a lot of calls lately from clients who are understandably a bit nervous. Whether you are a surgeon, a partner at a law firm, one of our medical specialists, or a tech executive, your wealth strategy likely relies on the current tax framework. When the government starts talking about “capping” and “trimming” the very mechanisms you use to build wealth, it is time to sit up and take notice.
Today, we are diving into what these proposed reforms actually look like and, more importantly, how they might affect your borrowing power and your mortgage.
The Big Three: What is on the Chopping Block?
The proposed 2026 reforms are focusing on three main areas that impact high earners the most: negative gearing, Capital Gains Tax (CGT), and personal income tax brackets.
First up is negative gearing. For decades, this has been the bread and butter of Australian property investment. The proposal on the table involves capping the amount of investment losses you can offset against your personal salary. There is even talk of “ring-fencing” these losses, meaning you could only offset property losses against property income, rather than your total taxable income.
Then we have the CGT discount. Currently, if you hold an asset for more than 12 months, you get a 50% discount on the capital gains tax when you sell. The proposed reform looks to trim this down to somewhere between 30% and 33%. For someone selling a high-value investment property, that is a significant chunk of change staying with the taxman instead of going into your next venture.
Finally, to make these changes more “palatable” for the voting public, there is the promise of personal income tax cuts. While a few extra dollars in the weekly pay packet is always welcome, for high-income earners, these cuts rarely offset the loss of significant investment deductions.
How Negative Gearing Caps Affect Your Mortgage Serviceability
When we sit down to look at a mortgage application for a professional client, we don’t just look at your base salary. We look at your “global” financial position. One of the biggest ways these reforms will hit is through serviceability calculations.
Lenders currently factor in the tax benefits of negative gearing when they calculate your ability to repay a loan. If you have a $1.5 million investment loan and the property is “underwater” (meaning the rent doesn’t cover the mortgage and expenses), the fact that you can claim that loss against your high tax bracket helps your cash flow. It makes the “net” cost of the debt lower in the eyes of the bank.
If negative gearing is capped or ring-fenced, that tax benefit disappears or is severely delayed. Suddenly, your “net” cash flow looks a lot tighter. From a lender’s perspective, your “capacity” to take on more debt could drop significantly. If you were planning to expand your portfolio in late 2026, you might find that the bank says “no” to a loan amount they would have happily approved in 2025. This is why staying ahead of the curve is so important. You can read more about how market changes affect your monthly commitments in our recent post on the RBA and monthly mortgages.
The CGT Discount Reduction and Your Equity Release Strategy
For many of our clients, the primary goal isn’t just to “own” property – it is to use that property to build equity that can be released for future investments. This is often done through a “cash-out” or a strategic refinance.
The proposed reduction of the CGT discount from 50% down to roughly 33% changes the math on your long-term wealth strategy. If you know that selling an asset will result in a much higher tax bill, you are less likely to sell. This leads to “asset locking,” where investors hold onto properties longer than they otherwise would.
However, if you need to access that wealth to fund a new business venture or a deposit for another home, you might look toward equity release. If the underlying value of your portfolio is being squeezed by future tax liabilities, lenders might become more conservative with their Loan-to-Value Ratio (LVR) caps for equity top-ups. Essentially, the “cushion” you thought you had might feel a bit thinner. We often help clients navigate these complexities through strategic refinance to ensure they are unlocking wealth in the most tax-effective way possible.
Why a Strategic Finance Review is Now Non-Negotiable
If there is one thing we have learned at Stellar Finance Group, it is that the best time to fix a roof is while the sun is still shining. We are currently in that “pre-reform” window. Once these changes are legislated and come into effect, the “old” rules won’t apply to new lending.
A strategic finance review right now isn’t just about finding a lower interest rate – although that is part of it. It is about “future-proofing” your borrowing capacity. We look at your current debt structure and ask:
- Are your loans structured to withstand a cap on negative gearing?
- Do you have enough “buffer” in your serviceability to weather a change in how the banks calculate your income?
- Should you be looking at borrowing with a trust to potentially mitigate some of these impacts?
For high-income professionals, your time is your most valuable asset. Trying to keep up with the intricacies of tax law while also managing a demanding career is a recipe for burnout. That is where we come in. Whether you are a medical specialist or a broader professional client, we take the “finance” part off your plate so you can focus on what you do best.
The Psychological Shift: From Income to Assets
These proposed reforms represent a broader shift in Australia – a move away from taxing income and toward taxing wealth and assets. For the “high earner” who is working 60 hours a week, it can feel like you are being hit from both sides. You pay a high rate of income tax, and then the tools you use to grow your wealth are being restricted.
It is proving to be very challenging times for us all, but it is not all doom and gloom. Change always brings opportunity for those who are prepared. By reviewing your portfolio now, you might find that consolidating debt or shifting to a different lender with more “investor-friendly” policies could put you in a much stronger position before the 2026 deadline. Whether it is debt consolidation or simply optimising your offset accounts, every little bit of preparation counts.
Don’t Wait for the Budget Speech
The 2026 tax reforms are still in the “proposed” stage, but the direction of travel is clear. Waiting until the legislation is signed to take action is a risky move. By then, the banks will have already adjusted their internal calculators, and your window of opportunity to “lock in” your current borrowing capacity might have closed.
At Stellar Finance Group, we pride ourselves on being more than just brokers – we are your strategic partners in wealth. We understand the unique pressures faced by high-income professionals because we work with them every single day. We know that your mortgage isn’t just a loan; it is a tool for building your future.
If you are concerned about how these 2026 tax reforms might impact your property portfolio, your ability to borrow in the future, or even plans for car finance, let’s have a chat. We can run the numbers, look at your current structure, and make sure you are in the best possible position to navigate whatever the government throws our way in the May budget.
Ready to future-proof your finance?
Visit www.stellarfinancegroup.com.au to book your strategy session today. Let’s make sure your wealth strategy stays on track, no matter what happens with the tax laws.
