Borrowing Capacity After the 2026 Budget, Michael Killiner, Tusk Finance

Lending has tightened sharply since the 2026 Budget. The investors who understand the new rules will be positioned to buy while others sit out. Michael Killiner, Director of Tusk Finance, joins Reece Beddall and Lachlan Delahunty to break down exactly what the negative gearing and capital gains tax changes mean for borrowing capacity, serviceability assessment, and cash flow for Australian property investors in the second half of 2026.

How the Budget Changes Affected Borrowing Capacity

The removal of negative gearing on established future purchases changes the serviceability calculation for investors in a specific way. Previously, the tax deduction associated with a negatively geared property reduced the investor’s taxable income, which in turn improved their net income position as assessed by lenders. Without that deduction on new purchases, the cash flow position of the investment property looks worse on paper to the lender’s assessment model.

Michael Killiner quantifies the impact: for a typical investor on a $150,000 salary purchasing a $700,000 established property in Sydney, the removal of negative gearing on future purchases reduces assessed borrowing capacity by approximately $40,000 to $60,000 depending on the lender. For investors already carrying multiple mortgages, the compounding effect across the portfolio is more significant.

What the CGT Changes Mean for Investor Cash Flow

The CGT adjustments affect investor decision-making in a less immediate but equally important way. Investors who were planning to recycle equity through strategic sales need to reassess the after-tax return on those disposals under the new discount framework. Michael Killiner and the Follio team walk through the scenarios where the CGT change materially affects the economics of a planned sale versus those where the impact is minimal.

The Finance Strategies That Still Work in the Post-Budget Environment

The post-budget lending environment is tighter, but it is not closed. Michael Killiner identifies the specific approaches that remain effective for investors seeking to maintain or grow their borrowing capacity: interest-only structures on existing portfolio assets to preserve cash flow, offset account optimisation to reduce assessed debt levels, and the specific lender policies that are most favourable to investors with multiple properties in the current environment.

Published: 23 Jul 2026