Will Your Property Keep Negative Gearing After the 2026 Changes?
The 2026 Federal Budget announced proposed 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 new build rules.
Important: The changes described on this page were announced in the 2026 Federal Budget on 12 May 2026. They are proposed measures and are not yet fully law. Details and dates may change as legislation passes through Parliament. Always confirm your position with a registered tax agent or accountant.
What Is Negative Gearing?
Negative gearing happens when the cost of holding an investment property is more than the rental income it produces. Under current rules, that net loss can reduce other taxable income, such as salary, while you wait for the property to grow in value.
Common Property Holding Costs
- 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
Simple Example
An investment property earns $28,000 in rent for the year. Loan interest and other costs total $34,000. The $6,000 net loss can currently be used to reduce other taxable income, such as salary, under the existing rules.
Key Timeline
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 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. 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 is proposed to be 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 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. The federal definition is specific and separate from state grants.
Deal Types That May Qualify
- 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 May Not Qualify
- 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 with the same dwelling count
Federal new build rules are separate from state grants: 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 federal negative gearing rules. Confirm the federal treatment with your accountant.
The Connected CGT Changes
Alongside negative gearing, the 2026 Budget also announced proposed changes to Capital Gains Tax. 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 may use 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 depending on your income, structure, holding period and the final legislation. Use this guide to ask better questions, not as a substitute for advice.
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.
Always speak to your accountant. This tool gives you an indicative read only. Your actual eligibility depends on your personal tax position, the final legislation and the specific details of your contract and property.
Answer the questions below
Your indicative eligibility result will appear here as you make selections.
1. When was the purchase contract signed?
Grandfathering generally depends on contract exchange date, not settlement date.
2. Is the property new or established?
Eligible new builds are expected to remain exempt. Established residential properties bought after the cut off may be restricted.
3. Which best describes the deal?
Select the closest match. Some deal types need accountant review.
Likely Qualifies
Unlikely
Needs Review
4. How is the property being held?
Some structures, such as super funds or certain trusts, may be treated differently.
Negative Gearing Questions Answered
What is negative gearing?
Negative gearing happens when the cost of holding an investment property, including loan interest and expenses, is more than the rental income it produces. The net loss can currently reduce other taxable income such as salary.
What changed with negative gearing in 2026?
In the 2026 Federal Budget, the Government announced that from 1 July 2027, negative gearing on established residential investment properties purchased after 7:30pm AEST on 12 May 2026 would be restricted. These are proposed measures and are not yet fully legislated.
Is my existing investment property still negatively geared?
If you owned the property or exchanged contracts on or before 7:30pm AEST on 12 May 2026, it is generally treated as grandfathered under the announced policy. Confirm your exact position with your accountant.
Does the cut off use contract date or settlement date?
The contract exchange date is the key date, not settlement. If you exchanged contracts on or before 7:30pm AEST on 12 May 2026, the property is generally grandfathered even if settlement happens later.
Can I still negatively gear a new build after the changes?
Under the announced rules, eligible new builds are exempt from the proposed restrictions and continue to access negative gearing. The federal definition of a new build is specific, so confirm with your accountant.
Do these changes affect my SMSF or trust?
Some structures, such as superannuation funds including SMSFs and widely held trusts, may be excluded from the negative gearing changes. The treatment of family and discretionary trusts may be more complex and should be reviewed by your accountant.
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 lending decisions across our 50 plus lender panel.
Book a Free ChatIndicative 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.
