Smart Ways to Approach Tax and Home Loans in Belmont

Tax changes introduced in mid-2026 have altered the way investors and buyers think about property financing in Belmont and across Victoria.

The rules around negative gearing and capital gains now depend on when you bought and what type of property you own. For owner-occupiers, Victorian stamp duty concessions and federal deposit schemes continue to make home loans more accessible, particularly when you understand which concessions apply to properties in this area.

How Negative Gearing Rules Affect Investment Loans from 2027-28

Losses from investment properties purchased after 12 May 2026 can only be offset against income from other residential properties starting in the 2027-28 financial year. Properties held before that date retain full deductibility against all income, including wages.

Consider a Belmont investor who purchased a two-bedroom unit near High Street in early 2026. Their rental losses can still be deducted against their salary each year. Another investor purchasing a similar property in late 2026 will need to carry forward those losses until they have capital gains or other residential property income to offset them against. Both scenarios remain viable, but the second requires more capital or lower borrowing to maintain serviceability without relying on tax deductions to cover shortfalls.

Capital Gains Treatment for Properties Sold After 1 July 2027

From 1 July 2027, the 50 per cent capital gains discount is replaced by cost base indexation and a 30 per cent minimum tax rate on gains accruing from that date. Investors will index the purchase price by inflation and pay tax only on real gains above that indexed amount.

For owners of new builds purchased after 12 May 2026, both the indexation method and the 50 per cent discount remain available as a choice at sale. This means a buyer purchasing a newly completed townhouse in one of the developments near Barrabool Road has two pathways to calculate their capital gains liability when they eventually sell, giving them flexibility depending on inflation and holding period.

Victorian Stamp Duty Concessions for First Home Buyers

Victoria offers a full stamp duty exemption on properties valued up to $600,000 and a sliding concession on properties between $600,001 and $750,000 for first home buyers. The exemption applies to both new and established homes, provided the buyer moves in within 12 months and lives there for at least 12 continuous months.

Belmont sits within reach of these thresholds. A first home buyer purchasing an established home valued at $580,000 near the Belmont Common precinct pays no stamp duty at all, reducing upfront costs significantly. That saving can be redirected into the deposit or retained as a buffer for settlement and moving costs. A property valued at $700,000 attracts a reduced duty amount under the concession, still offering meaningful relief compared to standard rates.

Buyers should confirm the property value falls within the applicable band and that they meet the residency requirements. These concessions work alongside federal schemes, including the Australian Government 5% Deposit Scheme, which allows eligible first home buyers to purchase with a 5 per cent deposit without paying lenders mortgage insurance.

How the Australian Government 5% Deposit Scheme Works in Belmont

The Australian Government 5% Deposit Scheme provides a guarantee to participating lenders, enabling eligible buyers to purchase with a deposit as low as 5 per cent without paying LMI. In Victoria, the property price cap is $950,000 for capital cities and regional centres, which includes Geelong and surrounding suburbs like Belmont.

Applications are made through participating lenders, not directly through Housing Australia. The scheme is available for both variable rate and fixed rate loans, depending on the lender. No income caps apply, and there are no annual place limits, making it accessible to a broader range of buyers than previous iterations of the scheme.

A buyer purchasing a home valued at $700,000 in Belmont would need a deposit of $35,000 under this scheme, with Housing Australia guaranteeing up to 15 per cent of the property value to the lender. That reduces the combined loan-to-value ratio to 80 per cent, removing the need for LMI. The scheme cannot be combined with Help to Buy, but it can be used alongside Victorian stamp duty concessions, provided eligibility requirements for each program are met.

Using Offset Accounts to Manage Loan Costs Under New Tax Rules

An offset account linked to your home loan reduces the interest charged on the loan balance without affecting the deductibility of interest on investment loans. For investors subject to the new negative gearing rules, maintaining deductibility while minimising interest paid becomes more important.

Investors holding properties purchased after 12 May 2026 should consider keeping surplus cash in an offset account attached to their owner-occupied loan rather than paying down the investment loan directly. This approach preserves the deductible debt on the investment property while reducing interest costs on the non-deductible owner-occupied loan. It also maintains flexibility if cash is needed later, as redraw facilities can complicate tax treatment when funds are withdrawn and reused.

Fixed, Variable or Split: Choosing a Loan Structure for New Rules

Fixed rates provide certainty over repayments for a set period, typically between one and five years. Variable rates allow for offset accounts and extra repayments without restriction. A split loan combines both, locking in a portion of the loan while keeping the rest variable.

For owner-occupiers in Belmont purchasing within the Victorian price cap thresholds, a variable loan with a linked offset account offers flexibility and the ability to reduce interest charges as savings accumulate. For investors purchasing under the new tax rules, a split structure may provide a balance between repayment certainty and the ability to use offset features on the variable portion.

Rate movements remain difficult to predict. Buyers should focus on loan features that align with their cash flow and savings behaviour rather than attempting to time the market. A broker can model different structures using current rates and help determine which approach suits your circumstances.

What Owner-Occupiers in Belmont Should Focus On

Owner-occupiers are not affected by the negative gearing or capital gains changes. Victorian stamp duty concessions and federal deposit schemes remain the primary considerations when structuring a home loan in this area.

Buyers should confirm their eligibility for the Victorian first home buyer exemption or concession early in the process, particularly if the property is close to the $600,000 or $750,000 thresholds. Small differences in purchase price or valuation can determine whether the full exemption or sliding concession applies. Buyers using the Australian Government 5% Deposit Scheme should also confirm that both the purchase price and the lender's valuation fall within the $950,000 cap, as both figures must meet the threshold.

For those not eligible for first home buyer concessions, refinancing an existing loan or using equity from another property may provide more flexibility than increasing the deposit on a single purchase. A loan health check can identify whether your current loan structure is still appropriate or whether better options are available.

Tax rules, concessions and loan features all interact when you purchase or invest in property. Call one of our team or book an appointment at a time that works for you to discuss how these rules apply to your situation.

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