Property investing
Negative gearing and the 2026-27 reform
How negative gearing works today, exactly what changes from 1 July 2027, and whether your own purchase date is grandfathered — now law, not a proposal.
- Negative gearing today has no cap and offsets any income — this remains true for any property held before 7:30pm AEST 12 May 2026, for as long as you hold it.
- From 1 July 2027, an established property bought after that date can only offset losses against other residential property income, not salary or wages.
- A genuine new build keeps unrestricted negative gearing indefinitely, regardless of purchase date — but the concession doesn't transfer to a later buyer of that dwelling.
- This is now law (Treasury Laws Amendment (Tax Reform No. 1) Act 2026), not a policy still under debate.
- Widely held trusts and superannuation funds, including SMSFs, are excluded from the change entirely.
How negative gearing works today
If a rental property's deductible expenses exceed the rent it earns, that loss can currently be used to reduce other assessable income — salary, wages, or business income. There's no cap on how much can be deducted this way, and if your other income isn't enough to absorb the full loss in one year, the excess carries forward to the next. (Australian Taxation Office, verified 11 Aug 2026) This is the position for any property bought before 7:30pm AEST on 12 May 2026, for as long as it's held, and for any residential property purchase — new or established — right up until 30 June 2027.
What changes from 1 July 2027
The 2026-27 Federal Budget reformed negative gearing, and — unlike a lot of speculated tax changes — this one is already law, legislated via the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, not a policy still under debate. (Australian Government Treasury, verified 11 Aug 2026) From 1 July 2027, negative gearing for residential property is limited to new builds. For an established property bought from 7:30pm AEST 12 May 2026 onward, rental losses can only be offset against other residential property income — including capital gains from another investment property — not against salary or wages. Any excess loss still isn't lost: it carries forward to reduce future residential property income. A new build keeps unrestricted negative gearing indefinitely, regardless of when it's bought, before or after the 2027 cutover. The change applies to individuals, partnerships, companies and most trusts — widely held trusts (most managed investment trusts) and superannuation funds, including SMSFs, are specifically excluded from it.
Which bucket is your property in?
| When you bought (or buy) | Negative gearing treatment |
|---|---|
| Established property, held before 7:30pm AEST 12 May 2026 | Fully negatively geared for as long as you hold it — no change, ever, for this property |
| Established property, bought 12 May 2026 – 30 June 2027 | Negatively geared as normal until 30 June 2027, then moves to the restricted treatment below |
| Established property, bought from 1 July 2027 | Losses only offset other residential property income (incl. capital gains), not salary or wages; excess carries forward |
| New build, any purchase date | Unrestricted negative gearing, indefinitely — the 2027 change doesn't apply to these at all |
What actually counts as a "new build"
This matters because a new build keeps today's negative gearing rules forever. To qualify, the property has to genuinely add to housing supply: a dwelling constructed on vacant land, or an existing property demolished and replaced with more dwellings than before. (Australian Government Treasury, verified 11 Aug 2026) A knock-down rebuild that just replaces one house with one house doesn't qualify, and neither does a granny flat added to an established property. The dwelling also can't have been previously sold — unless it was first owned by the builder and left unoccupied for no more than 12 months. Importantly, the concession is tied to that original purchase: if you buy a "new build" second-hand from an earlier investor, you don't get new-build treatment on it — that's a genuinely important point when comparing an off-the-plan purchase against buying an already-tenanted near-new apartment from another investor.
What this reform doesn't touch
The negative-gearing restriction only applies to residential property. Commercial property, shares and other asset classes aren't affected by this specific change at all — though CGT indexation (see the capital gains tax guide) applies more broadly. Widely held trusts and superannuation funds, including SMSFs, are also excluded from the negative-gearing change specifically — a distinct question from whether SMSF property investment makes sense for you, which this page doesn't attempt to answer.
Practical checklist
Before you rely on negative gearing in your investment plan
- Check which of the four grandfathering buckets your property (or intended purchase) actually falls into
- If buying an established property after 12 May 2026, model your cash flow assuming the post-2027 restricted treatment, not today's unrestricted one
- Don't assume a near-new apartment automatically gets new-build treatment — check whether you'd be its first owner
- Get current advice from a registered tax agent or accountant before relying on any projected tax outcome in your investment decision
Questions for a professional
- Given my actual purchase date, which negative-gearing treatment applies to this property, now and after 1 July 2027?
- Does this specific property meet the new-build definition, and does my position as buyer (first owner vs. a later purchaser) affect that?
- How should I structure this purchase (individual, trust, or another entity) given these changes?
Official resources
- ATO: Tax reform — Boosting home ownership — Reforming negative gearing and CGT
- Australian Government Budget 2026-27: Negative Gearing and Capital Gains Tax Reform
- ATO: How to claim rental expenses (positive or negative gearing)
Sources and methodology
- How to claim rental expenses | Australian Taxation Office — Australian Taxation Office (retrieved 11 Aug 2026)
- Negative Gearing and Capital Gains Tax Reform | Budget 2026-27 — Australian Government Treasury (retrieved 11 Aug 2026)
- Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax | ATO — Australian Taxation Office (retrieved 11 Aug 2026)
Figures on this page are drawn from Delora's local knowledge graph, refreshed from these primary sources and checked for changes on a regular schedule. If a figure here looks out of date, the official source above is always the authority — please let us know.