Login
How to build $150K+ in passive income after the 2026 budget
The budget changed the maths, not the goal. Kev Tran maps a real client scenario post-budget, showing how $150K+ in passive income is still on the table.
Is $150K+ Passive Income Still Possible After the Budget?
I’ve never heard the phrase “negative gearing” thrown around as much as I have these past few months. It’s been on every investor and commentator’s lips since budget night, and the mood out there is flat. A lot of people have quietly decided it’s a new world and there’s no way they can build wealth through property anymore.
I don’t buy that. The strategy has shifted a little, but you can still get there. So rather than argue it, let me show you. What follows is a live client scenario our head of strategy and I mapped out, year by year, post-budget, on conservative numbers. Same couple, same goal, new rules.
This isn’t financial, tax or credit advice. We always confirm everything with the right broker and accountant. It’s a property plan built on conservative assumptions, nothing more.
The couple
Mid-30s, currently renting, clean slate with no property yet. We always start with the end goal and reverse-engineer back to the next purchase.
|
Starting position |
Figure |
|---|---|
|
Household income |
$250K |
|
Savings |
$150K |
|
Surplus cash flow |
~$3,500 / month |
|
Combined super |
~$250K |
|
Goal (today’s dollars) |
$125K passive income |
|
Goal (inflation-adjusted, ~2045) |
~$200K |
Table 1. The starting position. The $125K goal is set in today’s dollars, then inflation-adjusted out to the target year.
The assumptions
Every input below sits on the conservative side on purpose. If the plan still reaches the goal on these numbers, you can have real confidence reality will run better.
|
Assumption |
What we use |
Why |
|---|---|---|
|
Capital growth |
5% p.a. |
Long-term Australian average is closer to 7%; we take well under it |
|
Interest rate |
5% p.a. |
Flat long-term average, even with rates in the 6s now |
|
Borrowing capacity |
6x → 4.5x income |
A 30% serviceability cut, the worst case brokers are seeing post-budget |
|
Rental yield |
4% / 5.5% |
4% on houses, 5.5% on boutique units |
|
Inflation, rents, wages |
2.5% |
Mid of the RBA band; no promotions assumed |
|
Savings & buffer |
In offset |
Cuts interest paid; buffer kept after every purchase |
Table 2. Modelling assumptions for the post-budget scenario.
|
What actually changed at budget night Negative gearing isn’t abolished, it’s deferred. If you owned before 7:30pm on 12 May 2026 you keep gearing those assets. Buy now and you can still gear until 30 June 2027. After that, losses on new purchases are captured and accumulated, then washed against future rental profits or the eventual sale. You still get the benefit; it just shows up later. CGT gets more complex from 1 July 2027. Sell before 30 June 2027 and the 50% discount still applies. After that, a 30 June valuation is captured, the discount is locked to that point, and a CPI indexation method applies from there to sale, with a minimum 30% tax on the gain. Pre-September-1985 properties are now caught too. The real lever is serviceability. With gearing trimmed on new purchases, lenders assess investors harder. We model a 30% cut to borrowing power and assume it never comes back. Worst case, on purpose. |
The build, year by year
We stay lean, with no buying for the sake of it. The aim is the cleanest, leanest path to the goal: a few good-quality growth assets up front, then balance the portfolio with yield, then one higher-yielding asset to carry the cash flow.
|
Year |
Purchase |
Structure |
Deposit |
Asset type |
|---|---|---|---|---|
|
2026 |
$700K |
Personal name |
10% |
Established house, 4% yield |
|
2026 |
$700K |
SMSF |
20% |
House; doesn’t touch household cash flow |
|
2028 |
$550–600K |
Personal name |
10% |
Boutique unit / townhouse, 5.5% yield |
|
2030 |
$600K |
Personal name |
10% |
Boutique unit, 5.5% yield |
|
~2030 |
Borrowing capacity caps out |
n/a |
n/a |
Resi accumulation ends |
|
~2035 |
~$2M |
Equity + cash |
n/a |
Commercial, 5.5–6% net yield |
|
~2044 |
Cross the goal |
n/a |
n/a |
Hold and let income offset debt |
|
2046 |
Sell SMSF house → $3M |
SMSF |
35% LVR |
Higher-yield commercial |
Table 3. The post-budget acquisition timeline. Years and prices are stated where they were specified in the modelling; gap years are deliberate “no-buy” periods while equity and serviceability rebuild.
The cash flow story is the part most people get wrong. The low point is early, around 2030, at roughly $24.5K a year out of pocket to hold the portfolio, about $2K a month, while the couple is still saving around $3,500 a month. From there rents and wages tick up, and by about 2034 the portfolio turns cash-flow neutral to positive. The commercial purchase is what kicks that along.
|
What the new CGT actually looks like, worked through Take the first house, sold later in the plan for $1.8M. The model captures the 50% discount up to 1 July 2027, then applies the indexation method through to sale. Total CGT payable across the hold comes to roughly $300K. After clearing debt and paying the agent, the couple still walks away with about $818K in cash. The new rules are messier, but the maths still works. |
The result
|
Outcome |
Outside super |
With super |
|---|---|---|
|
Target (inflation-adjusted, ~2045) |
~$200K |
n/a |
|
Achieved (post-budget) |
~$231K |
+~$95K |
|
Properties held |
4 |
1 (SMSF) |
Table 4. Goal vs outcome. The plan clears the target, and the SMSF stacks roughly another $95K on top.
Three ways to run it
Same couple, three versions. Here’s the part that surprised even us: the post-budget plan reaches the goal slightly sooner than the pre-budget one. Drop a purchase, carry less debt, and you can actually arrive faster, which suits a lot of people’s risk appetite better anyway.
|
Scenario |
What’s different |
End result |
|---|---|---|
|
Pre-budget |
Full 6x borrowing; one extra purchase |
~$250K outside super |
|
Post-budget |
4.5x borrowing; one fewer purchase |
~$231K outside, +$95K super; goal hit slightly earlier |
|
Post-budget + home |
Sell two assets at 60 to buy a home |
Owns a ~$2.5M home outright; income holds as the SMSF fills the gap |
Table 5. The three scenarios compared. The third sells two properties at retirement to buy a home outright (an $800K-today home compounding at 5% reaches ~$2.5M), with SMSF income covering the transition.
The takeaway
The budget changed the sequencing, the borrowing assumptions and the type of assets we lean on. It didn’t change the fact that a lean, well-structured portfolio built on conservative numbers still works. Property still makes sense, especially with supply as tight as it is and immigration still running. The strategy shifts a little. The goal doesn’t.
What separates the people who build wealth from the people who freeze isn’t timing the market. It’s having a plan mapped to their own situation, then holding it.
If you want clarity on what the changes mean for you, book a Clarity Call at kevtran.com.au. We’ll stress-test your numbers, the assets, and what the end outcome looks like for you and your family.
