Australia’s property landscape could be in for a shake-up as the federal government’s controversial superannuation tax changes loom, with experts flagging potential ripple effects for investors and borrowers alike.
From July 1, 2026, new draft legislation will see superannuation earnings on balances over $3m taxed at a higher rate, a move that could subtly but significantly alter investment strategies, particularly for those with self-managed super funds holding real estate.
While the changes directly target high-value super balances, the real estate sector is bracing for flow-on effects.
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Money.com.au’s Finance and Mortgage Expert, Alex Dore, highlights that for some self-managed super funds investors, the increased tax on realised investment earnings – including rent and capital gains within super – could make holding property outside their super fund a more attractive proposition.
“For Australians with high-value super balances – often held in self-managed super funds – the changes increase the tax on realised investment earnings inside super, including interest, dividends, rent and realised capital gains, meaning a bigger slice of returns goes to the tax office,” he explained.
Federal superannuation tax changes targeting balances over $3 million could trigger a property market shift as wealthy investors reconsider their investment strategies.
This shift in tax efficiency could reduce the incentive for individuals transitioning into retirement to sell investment properties and move the proceeds into super if it pushes their balance above the $3m threshold.
“For some SMSF investors, that could make holding property for longer more attractive, with potential flow-on effects for housing supply at the margin,” Mr Dore noted.
The proposed legislation will see superannuation earnings on balances exceeding $3m taxed at 30 per cent, up from 15 per cent, impacting around 90,000 people.
For balances over $10m, the tax rate on earnings will jump to 40 per cent.
These thresholds will be indexed, and the tax will only apply to realised gains, addressing a key point of contention from the original proposal.
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Money.com.au’s Finance & Mortgage Expert, Alex Dore
Treasurer Jim Chalmers stated the changes aim to make superannuation tax concessions “fairer and more sustainable.”
Beyond investment decisions, the tax reforms could also subtly impact borrowing capacity for a specific cohort of older Australians.
Mr Dore suggests that if banks adopt a more conservative approach to assessing super income in response to these higher taxes, it “could slightly reduce borrowing capacity for that cohort” who are already drawing an income from their super to service loans.
Meanwhile, changes to the Low Income Superannuation Tax Offset are set to boost retirement savings for lower-income Australians, with the threshold increasing from $37,000 to $45,000 from July 1, 2027.
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Treasurer Jim Chalmers said the draft legislation would make superannuation tax concessions “fairer and more sustainable”.
However, Mr Dore believes these changes will have virtually no impact on property buyers in this demographic.
“These are lower-income, generally younger workers who aren’t at a life stage where super can be accessed as income, so it doesn’t factor into home loan servicing at all,” he said.
Consultation on the draft bill is open until January 16, 2026, with the government aiming to introduce the legislation “as soon as possible in 2026.”
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