Last updated: 12 May 2026
2026-27 Budget · Downsizers & retirees
Downsizers and retirees: what the 2026-27 Budget means for you
For older Australians, the 2026-27 Budget delivers a mix: meaningful tax changes for investment property and trusts, important protections for pensioners and the family home, and a $3.7 billion aged care package. The two big questions for downsizers and retirees are the family home (unchanged – still CGT-free) and any investment properties or trust holdings (significant new rules from 2027 and 2028).
Your family home: nothing changes
Statement 4 of Budget Paper No. 1 is explicit: the main residence CGT exemption is not affected by the tax reform package, and superannuation tax arrangements are not affected either. If you sell the home you live in, the proceeds are CGT-free as they have been. The downsizer superannuation contribution rules also continue unchanged.
Investment property: the new CGT regime
From 1 July 2027, the 50% CGT discount is replaced with cost base indexation and a 30% minimum tax on real capital gains for individuals, trusts and partnerships. Two pieces of news for retirees specifically:
Good news
Pensioners exempt from the 30% minimum
Income support recipients – including age pensioners – are exempt from the 30% minimum tax floor. Your real capital gain is taxed at your marginal rate, with no floor imposed.
New reality
No more 'sell after retirement' timing strategy
For self-funded retirees not on the pension, the 30% minimum removes the benefit of deferring a sale until you drop into a lower marginal bracket. The Government explicitly cites this timing strategy as a target of the reform.
Discretionary trusts: the 2028 change
From 1 July 2028, discretionary trusts pay a 30% minimum tax at the trustee level. For retiree households using a family trust to direct investment income to a low-income spouse or beneficiary, the strategy loses its punch wherever the recipient would have been taxed below 30%. The Government is offering three years of expanded rollover relief from 1 July 2027 for taxpayers who want to restructure out of a discretionary trust into a company or fixed trust.
Aged care: $3.7 billion package
- $606.5 million for new capital subsidies for aged care providers building or expanding residential accommodation – up to 5,000 beds per year.
- $1 billion to make personal care services (like showering) under Support at Home free of charge, alongside clinical care.
- $1.1 billion provisioned for future restructure of the Accommodation Supplement and an additional payment for homes with more than 60% supported residents.
- $389.8 million over four years for Support at Home program refinements and to bring forward release of new program places.
- $565.1 million for regulatory, governance and quality arrangements, sector viability and workforce.
Medicare levy threshold lift
The Medicare levy low-income thresholds rise by 2.9% for singles, families and seniors and pensioners from the 2025-26 income year. Over a million Australians on lower incomes will continue to be exempt from the Medicare levy or pay a reduced rate.
Helping a child or grandchild buy?
Many over-55s use proceeds from downsizing to help family into a first home. HomeStack maps every scheme they may qualify for – FHSS, First Home Guarantee, Help to Buy, state grants, stamp duty concessions.
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Related reading
- CGT discount replaced with indexation and a 30% minimum tax
- 30% minimum tax on discretionary trusts from 1 July 2028
Frequently asked questions
Will my family home still be tax-free when I sell?
Yes. The main residence CGT exemption is explicitly unchanged. Selling the home you live in remains CGT-free, regardless of how long you've owned it. The new indexation and 30% minimum tax rules don't apply to your principal place of residence.
I'm a pensioner with an investment property. Does the 30% minimum tax hit me?
No. Income support recipients (including age pensioners) are exempt from the 30% minimum tax on capital gains. Your gain is still calculated under the new indexation rules from 1 July 2027 onwards, but the 30% floor doesn't apply.
Is the downsizer super contribution still available?
Yes. The downsizer contribution, which lets eligible Australians over 55 add up to $300,000 each from the proceeds of selling a home to their super, is not changed by this Budget. Superannuation tax arrangements generally are untouched.
Does the new aged care funding affect me?
The Budget provides $3.7 billion to increase residential aged care supply, accelerate Support at Home packages, and make personal care services free under Support at Home. There's also $606.5 million for new capital subsidies to build up to 5,000 aged care beds per year.
What about the discretionary trust minimum tax?
From 1 July 2028, discretionary trusts pay a 30% minimum tax on taxable income at the trustee level. Family trust structures used to distribute income to retiree spouses or beneficiaries will have a 30% floor – the strategy of distributing to low-income family members below 30% loses its benefit.
Source: Budget Paper No. 1, Statements 1 and 4, Australian Treasury, 12 May 2026.
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.