Will your property keep negative gearing after the 2026 changes
The 2026 Federal Budget announced major changes to negative gearing for Australian property investors. Use our free eligibility calculator to get an indicative read on your property, then read the plain English guide to understand grandfathering, the 12 May 2026 cut off and the new build rules.
What is negative gearing
Negative gearing happens when the cost of holding an investment property is more than the rental income it produces. Under the current rules, that net loss can reduce your other taxable income, lowering the tax you pay while you wait for the property to grow in value.
The costs that can create a loss include:
- Loan interest, usually the largest cost
- Property management and agent fees
- Council rates, water rates and insurance
- Repairs, maintenance and depreciation
- Body corporate or strata fees
Budget announcement and cut off
The Federal Budget announced changes effective from 7:30pm AEST on this date. Contracts signed on or before this point are generally grandfathered.
New rules apply to established property
Established residential investment properties purchased after this date become subject to the new restrictions. Eligible new builds remain exempt and keep full negative gearing access.
Restrictions take effect
From this date, rental losses on affected established properties can only be offset against residential rental income or capital gains from residential property, not against your salary. Excess losses can be carried forward to future years.
Still proposed, not yet law
These measures were announced in the Budget but still need to pass through Parliament. The detail, definitions and dates could change, or the measures may not proceed in their current form. Do not make irreversible decisions based on announced policy alone. Confirm with your accountant and watch for the final legislation.
Grandfathered versus affected properties
The single most important factor is when you signed your purchase contract. This determines whether you keep the current rules or move to the new ones.
Grandfathered (current rules)
Full negative gearing against all income continues.
- Property owned on or before 12 May 2026
- Contract exchanged on or before 12 May 2026, even if settled later
- Losses still offset salary and other income
- Applies for as long as you hold the property
- Eligible new builds also keep full access
Affected (new rules)
Negative gearing against salary restricted from 1 July 2027.
- Established property purchased after 12 May 2026
- Losses only offset residential rental income or property capital gains
- Excess losses carried forward to future years
- Does not reduce your salary or wage income
- Some structures such as super may be excluded
What counts as a new build
New builds are the key exemption. If a property qualifies as an eligible new build under the federal rules, it keeps full negative gearing access even after the cut off. But the federal definition is specific and separate from state grants.
Deal types that generally lean toward qualifying:
- House and land packages
- Land plus a separate build contract
- Off the plan apartments
- Construction on vacant land
- Knock down rebuilds that add dwellings
Deal types that generally do not qualify as new builds:
- Established property that is not a new build
- Extensions that add bedrooms to an existing home
- Granny flats on an established lot
- A new build occupied for 12 plus months before resale
- One for one knock down rebuilds (same dwelling count)
Federal new build is not the same as a state grant
A property that qualifies for a First Home Owner Grant or a state stamp duty concession does not automatically count as an eligible new build under the federal negative gearing rules. These are separate tests. Always confirm the federal new build status with your accountant before relying on it.
The connected CGT changes
Alongside negative gearing, the 2026 Budget also announced changes to capital gains tax. The two work together and both matter for investors planning a purchase or sale.
The current 50 percent CGT discount for assets held more than 12 months is proposed to be replaced from 1 July 2027 with a cost base indexation method and a minimum tax on net capital gains. For properties bought before the cut off, a split approach is expected: growth up to 1 July 2027 may keep the existing discount, while growth after that date uses the new method. Eligible new build investors may be able to choose between methods.
Get tax advice on the combined effect
Negative gearing and CGT changes interact in complex ways that depend on your income, structure, holding period and the final legislation. The combined effect on a specific deal is something only a registered tax agent or accountant can properly model for you. Use this guide to ask better questions, not as a substitute for advice.
Negative gearing questions answered
What is negative gearing?
What changed with negative gearing in 2026?
Is my existing investment property still negatively geared?
Does the cut off use the contract date or settlement date?
Can I still negatively gear a new build after the changes?
Do these changes affect my super fund or trust?
Negative gearing eligibility calculator
Answer the questions below for an indicative read on whether your property is likely to keep full negative gearing access under the announced 2026 changes. This is a guide only, not tax advice.
Property Investor Tool Negative Gearing Eligibility Calculator
Check how the 2026 negative gearing changes may affect your property
Answer a few quick questions about your property and contract timing. This tool gives you an indicative read on whether your property is likely to keep full negative gearing access under the announced 2026 Budget changes. It is a guide only, not tax advice.
1. When was the purchase contract signed?
2. Is the property a new build or established?
3. Which best describes the deal?
Likely Qualifies
Unlikely
Needs Review
4. How is the property being held?
Government policy and resources
Grandfathering depends on contract exchange, not settlement. Properties under contract on or before 7:30pm AEST on 12 May 2026 are typically grandfathered for negative gearing even if settlement is later. Contracts after that date generally do not qualify unless the property meets the federal new build rules.
Where to confirm the current rules:
- Australian Taxation Office (ato.gov.au) for the final legislated rules once passed
- The Treasury (treasury.gov.au) for Budget 2026 papers and the negative gearing fact sheet
- Your registered tax agent or accountant for advice on your specific situation
- Your Laxmi Home Loans broker for how loan structure interacts with your strategy
Speak with Kishor and the Laxmi Home Loans team about loan structure and timing. We work with your accountant to help you make informed decisions across our 50 plus lender panel.
Terms, Conditions and Important Information
Indicative guide only
This tool provides an indicative, general guide on how the announced 2026 negative gearing changes may apply to a property. It is not tax advice, financial advice or legal advice. The result is based only on the answers you select and a simplified interpretation of announced policy. Your actual position may differ.
Proposed measures, not law
The negative gearing and capital gains tax changes referenced in this tool were announced in the 2026 Federal Budget delivered on 12 May 2026. As at the date of publication these are proposed measures that have not been fully legislated. The detail, dates, definitions and transition rules may change as the legislation passes through Parliament, or may not proceed at all.
Summary of the announced changes
- Negative gearing on established residential investment properties purchased after 7:30pm AEST on 12 May 2026 is proposed to be restricted from 1 July 2027
- Rental losses on affected established properties would only be deductible against residential rental income or capital gains from residential property, with excess losses carried forward
- Properties held or under contract on or before 7:30pm AEST on 12 May 2026 are grandfathered and continue under the current rules, even if settlement is later
- Eligible new builds remain exempt and continue to access negative gearing
- The 50 percent capital gains tax discount is proposed to be replaced by cost base indexation with a minimum tax on gains from 1 July 2027
- Certain structures such as superannuation funds and widely held trusts may be excluded from the negative gearing changes
New build definition
The federal definition of an eligible new build for negative gearing purposes is separate from state based grants, first home owner grants and stamp duty concessions. A property that qualifies for a state concession does not automatically qualify as a new build under the federal tax rules. The final federal definition will be confirmed in the legislation.
Not financial, tax or credit advice
The content of this tool is general information only. It does not take into account your personal objectives, financial situation, taxation position or needs. Negative gearing outcomes depend heavily on your income, structure, other investments and the final legislated rules.
Laxmi Home Loans is an Australian credit assistance provider and mortgage broker. We do not provide taxation, accounting, financial planning or legal advice. For those services, please speak with a registered tax agent, accountant, licensed financial adviser or solicitor.
Seek personal advice before acting
You should obtain personal taxation, financial and legal advice from qualified professionals before making any decision to buy, sell, time a contract, or structure a property purchase based on this tool. Do not rely on this tool alone.
No liability
Laxmi Home Loans, Mero Chino Groups Pty Ltd, its directors, employees and associated entities accept no responsibility or liability for any loss or damage that may arise from reliance on this tool. Use of this tool is at your own risk.
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Credentials
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Plan your next move with confidence
Speak with Kishor and the Laxmi Home Loans team about loan structure and timing around the 2026 changes. We work alongside your accountant to help you make informed decisions across our 50 plus lender panel.
Important information
Indicative guide only. This page and the eligibility calculator provide a general, indicative guide on how the announced 2026 negative gearing changes may apply. They are not tax, financial or legal advice.
Proposed measures, not law. The changes were announced in the 2026 Federal Budget on 12 May 2026 and are not yet fully legislated. Detail, dates, definitions and transition rules may change as legislation passes through Parliament, or may not proceed.
Seek personal advice. Before acting, obtain personal taxation, financial and legal advice from qualified professionals. Speak with a registered tax agent or accountant about your specific situation, and with a Laxmi Home Loans broker about loan structure.
Laxmi Home Loans is a trading name of Mero Chino Groups Pty Ltd, ABN 76 169 013 012, Credit Representative Number 476974 under Australian Credit Licence 383640.
