The Freedom Brief

The thinking behind serious property wealth.

Week of 1 September 2026

Treasury's formula
forgot your renovation.

1 Jul 2027

The rules change

$1.77m

Cost of having renovated

New builds

Keep both concessions

1.0 The Signal

o one is reporting on this. The Australian Financial Review ran it on 25 August and it has gone almost nowhere since. It should have gone everywhere, because it changes the maths for anyone who has ever renovated an investment property.

Here it is in plain terms. From 1 July 2027 the 50 per cent capital gains discount is gone for most property. If you still hold at that date, your asset has to be valued at the changeover. You can pay a valuer, or you can use the formula Treasury wrote into the law.

The formula does not count your renovation. It runs off what you originally paid, as if the money you spent improving the place was never spent.

The money went in. The formula does not know that.

2.0 The Numbers

The Tax Institute showed Treasury what that does. Two owners. Same money in. Same money out. One of them renovated.

These are their numbers, not mine.

Where it stands

What it means

Owner A bought 2007

$3,000,000 in

$1m in 2007, plus $2m of works in 2015

Owner B bought 2007

$3,000,000 in

$3m in 2007, nothing spent since

Both sell 30 June 2037

$8,000,000 out

Same price, same day

Owner A taxed on

About $4.00m

The $2m of works is not counted

Owner B taxed on

$2.23m

Every dollar counted

Penalty for renovating

$1.77m

Extra gain, taxed

New-build homes

Exempt

Keep the 50% discount and negative gearing

Source: Tax Institute worked example, submitted to Treasury and reported in the Australian Financial Review, 25 August 2026.

Owner A is taxed on $1.77 million more than Owner B. They spent the same. They sold for the same. Owner A renovated.

Quote

You can spend three million dollars on a house. The formula will only remember one.

Now the part that matters.

New-build homes are exempt. They keep the 50 per cent capital gains discount. They keep negative gearing. Established property loses both, and if you have improved it, it carries the valuation problem as well.

That is the message. The rules now favour new builds, and not by a little. A new build starts with a clean cost base, nothing to substantiate and no valuer to chase.

The test underneath it has not changed. Does the asset pay for itself at today's lending rates, the rate the bank actually charges, not the cash rate? Tax decides what you keep. Cashflow decides whether you get there.

I am not your accountant and this is not advice on your situation. If you hold a renovated property and plan to still hold it after 1 July 2027, speak to your accountant this month about whether a formal valuation is worth getting. If you want to talk about what to buy from here, the booking link is below.

The New Rules — a free guide by Coleman Invest

The Free Guide

Property investing just changed. For a generation.

This is not another rate cycle. Negative gearing, SMSF lending, depreciation — the old playbook has been rewritten.

The opportunity has not disappeared. It has moved. I will show you where.

Get the Free Guide

If this changes what you should be buying, call or text me direct on 0418 813 825 — or

Book a Call with Ron

Because in the end, this was never really about tax.

It is about freedom. Governments change the rules at the edges. They have done it before and they will do it again. The people who get caught are the ones who never noticed which edge moved.

Buy what the rules were written to favour. Make it pay for itself. Hold it. The people who keep building quietly through the noise are the ones who end up free.

To your freedom,