Negative Gearing Is Changing: What Property Investors Need to Know.

Budget night back in May delivered one of the more significant changes to property tax in recent memory: negative gearing, as we know it, is being wound back for established properties. 

If you own an investment property, or you're thinking about buying one, here's what's changing, when it kicks in, and who it affects. 

The Short Version. 

From 1 July 2027, negative gearing will be limited to new builds. If you buy an established property after Budget night, you'll no longer be able to use rental losses to reduce your taxable wage or salary income the way you can today. 

That's the headline. But the detail matters, so let's break it down properly. 

If You Already Own an Investment Property, Nothing Changes. 

Properties held before Budget night are grandfathered. If you bought (or signed a contract on) your investment property before 7:30pm AEST on 12 May 2026, the existing negative gearing rules continue to apply to that property as they always have. This can also include the house you currently live in, if you start renting it out now. 

No action required here, just good to have it confirmed. 

Buy an Established Property After Budget Night? The Rules Are Different. 

This is where the real shift happens. If you purchase an established (i.e. not new) residential property after Budget night, and it produces a rental loss, that loss can no longer be offset against your salary or wages from 1 July 2027. 

Instead, the loss is quarantined, meaning it's carried forward and can only be used to offset future residential property income (or future capital gains from property), rather than reducing your tax bill this financial year. 

In practical terms: the tax benefit doesn't disappear, but the timing changes. Rather than getting an annual offset against your pay each year, you'll generally only benefit from those losses down the track, once you have property income (or a capital gain) to use them against. 

New Builds Are Exempt. 

Here's the exception worth knowing about: eligible new residential builds remain completely unaffected. If you buy a new build, you can continue to negative gear it against your other income exactly as you do now. 

This is a deliberate policy choice, the government wants to direct investment toward new housing supply, not just established stock. If you're weighing up new construction versus an established property as your next investment, this is now a meaningful factor in that decision, alongside the usual considerations like depreciation, land value, and expected growth. 

Why This Matters for Cash Flow, Not Just Tax. 

If you're a higher-income earner who relies on your negative gearing offset to help manage the cash flow of an investment property, this change is one to plan for early. Losing the ability to reduce your taxable income annually can materially change the month-to-month economics of holding an established property purchased after Budget night, even though the long-term tax outcome may even out eventually. 

What We'd Recommend 

This measure was announced on Budget night but isn't law yet, the final legislation could still adjust some of the detail, particularly around timing and how it applies to trusts, SMSFs, or company-held property. So our advice is simple: 

• Don't make reactive decisions based on media coverage alone. Wait for the legislation but plan ahead of it. 
• If you're planning to buy an established property, factor the 1 July 2027 change into your numbers now, especially if you were relying on the annual offset. 
• If you're comparing new builds vs. established property, this change is now part of that equation. 
• Talk to us before you sign anything, particularly if timing around Budget night or 1 July 2027 could affect which set of rules applies to you. 

Changes like this don't come around often, getting ahead of it now is what saves you an expensive surprise later. If you hold investment property or you're planning to buy, let's talk.