2026 Federal Budget
Negative Gearing Changes
What changes?
From 1 July 2027, negative gearing for residential property will generally be limited to new builds only.
This means:
-
Investors buying existing established homes after Budget night will no longer be able to offset rental losses against salary or other income once the transition period ends.
-
Investors buying newly constructed residential properties can still negatively gear under current rules.
-
Existing investment properties purchased before 7:30pm AEST on 12 May 2026 are grandfathered and retain existing rules indefinitely unless sold.
Transitional rules
-
Properties acquired between Budget night and 30 June 2027 may temporarily continue under current arrangements before the new rules commence.
-
Losses on non-qualifying properties will generally be quarantined to future rental income profits or property capital gains. (i.e. rental losses will not be lost but instead create a future income tax benefit)
Exemptions
The changes do not generally apply to:
-
Superannuation funds (including SMSFs)
-
Most widely held trusts / managed funds
-
Build-to-rent projects
-
Certain affordable housing programs.
Expected impact
The Government says the reforms are intended to:
-
reduce investor demand for established homes,
-
improve first-home buyer access,
-
redirect investment into new housing supply.