Everyone Has a Take on the Budget. Most of Them Are Missing the Point.

The May budget is days away and the commentary is already running hot. CGT discount cuts. Negative gearing on the chopping block. Buyer's agents telling investors what to do. Economists modelling price effects. Lobby groups warning about rental supply. My LinkedIn feed has been wall to wall with it for weeks.

Most of it is missing the part that actually decides what happens to your after-tax outcome.

Here's the thing. Every conversation about CGT and negative gearing eventually runs into depreciation, because depreciation is the mechanism that connects what you claim while you hold a property to what you pay when you sell it. And almost nobody writing about the proposed reforms is engaging with that connection. They're talking about the policy. They're not talking about how the policy actually flows through the numbers.

That's the gap I want to fill over the next couple of weeks, with two pieces — one for investors and advisers, one for accountants — and a short response after the budget itself.

Why I'm Bothering

I run a firm that does this work every day. Around four thousand depreciation reports a year, across every property category, residential through to specialised commercial, in every state. I hold both professional designations the field recognises — Chartered Quantity Surveyor through RICS and Certified Quantity Surveyor through AIQS. The two bodies set the technical and ethical standard the profession reserves for practitioners doing tax, legal, and dispute work.

What that volume gives you is pattern recognition. You see what depreciation actually contributes to returns across thousands of completed projects, not just the one in front of you. You see how the Division 40 and Division 43 components behave differently across asset classes. You see where investors and their advisers consistently leave money on the table because the schedule was scoped without thinking about disposal, only about holding. And when policy moves, you see the second-order effects faster than the headlines do.

Two Examples of What's Getting Missed

First, Division 40 and Division 43 are not the same thing at sale. One reduces your CGT cost base. One doesn't. If the CGT discount drops from 50% to 25%, the difference between them gets bigger, not smaller. Most of the commentary I'm reading is treating depreciation as a single concept. It isn't, and the gap between the two divisions is about to matter more than it has in a long time.

Second, the 2017 amendments closed the deduction pathway for second-hand plant and equipment in residential property, but they preserved a capital loss pathway on disposal. It's in the legislation. Most schedules don't track it. Most accountants don't surface it at sale. If negative gearing gets restricted to losses against future capital gains, that pathway becomes one of the few flexible offsets investors have left. I haven't seen anyone in the public commentary engaging with it.

These aren't exotic positions. They're the technical fundamentals. The reason they're missing isn't that they're hard. It's that they sit one layer below where most commentators are operating.

Buyer's agents see transactions. Economists see prices. Lobby groups see policy. The asset-level mechanics get skipped.

What's Coming

A piece for investors and advisers on what the proposed changes actually mean for after-tax returns on a real property, and what the depreciation strategy questions are that you should be raising with your QS and your accountant before the budget, not after.

A more technical piece for accountants and tax agents on the Division 40 capital loss pathway, why it's underweighted in practice, and why the proposed reforms turn it from a footnote into something worth tracking properly.

And after the budget itself, a short response cutting through the political noise and focusing on what the announced detail actually does to the numbers.

The policy debate will be loud. The mechanics underneath are quiet, technical, and where the after-tax outcome is actually decided.

That's what I'll be writing about.

— Mark