Negative gearing changes in 2026 — what they mean for your next purchase
The tax treatment of investment property changed in 2026. Here's what changed, who it applies to, and what it means in practice. General information only — not tax advice.
Last updated: 28 September 2026
The one-paragraph summary
From 1 July 2027, net rental losses on established residential properties acquired after 7:30 pm AEST on 12 May 2026 are quarantined. They can't reduce your salary or other non-residential income, but they can be used against residential property income or capital gains, and carried forward. Properties acquired before the cut-off are grandfathered, and genuine new builds keep access to negative gearing. Separately, the 50% CGT discount is replaced by cost base indexation with a 30% minimum tax on capital gains. Sources: Budget tax explainer and Parliamentary Library bills digest.
Timeline
Established vs new build
| Property | Losses against salary from 1 July 2027? | CGT from 1 July 2027 |
|---|---|---|
| Bought before 12 May 2026 (7:30 pm AEST) | Yes — grandfathered | Check with your accountant |
| Established, bought after the cut-off | No — quarantined to residential property income or capital gains, or carried forward | Indexation, 30% minimum tax |
| Genuine new build, bought after the cut-off | Yes — keeps negative gearing | Choose 50% discount or indexation |
Source: Budget tax explainer. How CGT applies to grandfathered properties depends on your circumstances — ask a registered tax agent.
Capital gains: discount → indexation + 30% minimum
From 1 July 2027, the 50% CGT discount is replaced by cost base indexation — the purchase cost is adjusted for inflation before the gain is worked out — with a 30% minimum tax on capital gains. Investors in new builds can choose either the 50% discount or indexation. Source.
What it changes in practice
Cash flow matters even more. If a loss on an established property can't reduce your tax on salary, you carry more of the weekly shortfall yourself. Run the numbers with the holding costs estimator and read cash flow vs tax treatment.
Be wary of sales pitches built on "still negatively geared". New builds keep the treatment, and some marketing will lean on that heavily. A tax treatment doesn't make a property a good purchase. Our guide to off-the-plan risks covers what to check.
What's still unclear
The exact definition of a "new residential dwelling" — which decides whether a property keeps negative gearing — is still being finalised by legislative instrument. Until it's settled, don't rely on a seller's description of a property as "new". Source.
Questions for your accountant
- Which of my properties are grandfathered, based on contract exchange dates?
- Would the property I'm considering count as a new residential dwelling?
- How would a quarantined loss affect my tax each year?
- Can I use carried-forward losses against future rental income or gains?
- How does indexation compare with the 50% discount on my likely gain?
- How does the 30% minimum tax on capital gains apply to me?
- Does ownership structure or whose name it's in change the outcome?
- What records should I keep from day one?
Quick FAQ
Does this affect properties I already own?
Not if you acquired them (contracts exchanged) before 7:30 pm AEST on 12 May 2026. Those properties are grandfathered and keep the existing negative gearing treatment.
Is a new build still negatively geared?
New residential builds that genuinely add to housing supply keep access to negative gearing. The exact definition of a 'new residential dwelling' is still being finalised by legislative instrument.
When does it start?
The quarantining of losses and the CGT change start from 1 July 2027. The cut-off for which properties are affected is 7:30 pm AEST on 12 May 2026.
Can I still claim deductions on an established property bought now?
Yes, expenses still create a rental loss. From 1 July 2027 that net loss can't reduce your salary or other non-residential income, but it can be used against residential property income or capital gains, and carried forward.
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