The federal budget's proposed changes to negative gearing and capital gains tax are hitting confidence among self-employed borrowers and small business owners, with mortgage brokers reporting clients are already delaying finance decisions and reassessing their borrowing capacity.
A national survey of almost 200 mortgage brokers by RedZed found that half of their small business clients feel either very or somewhat negative about the budget — compared with 36% who were very or somewhat positive — while more than 52% of brokers surveyed were themselves either somewhat or very negative about the significant tax changes announced by Treasurer Jim Chalmers. A further 56% said they were moderately or very concerned about the impact on their own business.
That finding lands on top of an already deteriorating backdrop. NAB's April Monthly Business Survey — conducted before the budget was handed down — found business conditions at their second lowest level since 2020, with capital expenditure recording its sharpest single-month fall of the post-COVID period and access to credit tightening across the sector.
The data points to a clear pattern: self-employed clients who were previously able to transact are now pulling back. RedZed CEO Calvin Cordle said the survey results confirmed the budget had landed badly for small business owners.
"What came through clearly in the survey of mortgage brokers was their clients' reduced serviceability due to the loss of negative gearing benefits, as well as the increased complexity in income and tax treatment. Their clients who could previously transact are now revising expectations," Cordle said.
The survey found small business owners are most concerned about their ability to service debt, the interest rate outlook, and reduced investment incentives — a combination that brokers say is already reshaping conversations with clients. A substantial 85% of brokers believe the budget will have an impact on property prices, with 81% expecting a moderate, significant, or very significant effect on investor demand specifically. A further 54% are opposed to the capital gains tax changes.
PropTrack's Home Price Index adds weight to that concern — national home prices recorded their first monthly fall of 2026 in April, before the budget's tax changes had even taken effect, with the national median slipping to $910,000.
Despite the negative sentiment, RedZed identified pockets of opportunity emerging from the structural changes. New construction retains more favourable tax treatment, and SMSF lending, commercial lending, refinancing, and debt restructuring are all areas where broker activity is expected to grow.
"If the budget was meant to be about housing affordability, why tax small business more? Self-employed business owners fear their hard graft will go straight to the government to fund their big spending," Cordle said.
"As negative gearing benefits become more limited for individuals, alternative ownership structures such as SMSFs are expected to gain relevance for certain investors. Similarly, commercial property, which is less affected by the new policy settings, may attract greater investor interest as relative returns become more favourable."
Brokers say clients with self-employed income will need active guidance to navigate the new landscape — particularly those who had previously relied on negative gearing as a core part of their investment strategy.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
