Negative gearing in Australia after the 2026 tax changes

From 2027-28, excess deductions on affected established residential investments are quarantined against residential income, not salary, subject to the Act’s exceptions.

Treasury’s explainer is the plain-language version. From 1 July 2027, negative gearing of residential property is limited to new builds. Properties held before announcement, 7:30 pm AEST on 12 May 2026, are exempt. The Act itself times the cutoff at 7.30 pm, by legal time in the Australian Capital Territory, on that date. Investors who buy established housing after the cutoff can deduct losses against other residential-property income, including capital gains, and can carry unused amounts forward. They cannot deduct those excess amounts against non-residential income such as wages.

The Act creates an exception for a “new residential dwelling” as defined by requirements the Minister determines. That is not a folk meaning of “off the plan” or “recently built”. Until you read the current instrument and the Act, do not assume a particular dwelling qualifies. Widely held trusts, superannuation funds and some government-housing programs are also carved out in the legislation. This page does not apply those carve-outs to a reader.

Rental income still has to be declared. The ATO still allows deductions for expenses incurred while the property is rented or genuinely available for rent on commercial terms. Interest on money borrowed to buy a rental property may still be deductible in that period. If borrowed funds are used privately, that interest is not deductible, and mixed-purpose borrowing must be apportioned.

The 2025-26 and 2026-27 income years are not the years the quarantining rule first applies. The restriction is enacted; its first income year is 2027-28. A purchase made now still has to be modelled with 2027-28 in mind if you intend to hold through that year.

From 1 July 2027, Treasury says the 50 per cent CGT discount is replaced, for affected gains accruing from that date, with an inflation-based cost-base arrangement and a 30 per cent minimum tax, subject to exemptions. New builds may be able to choose between the 50 per cent discount and the new arrangements. Pre-1 July 2027 gains are treated separately under the transitional rules. This is not only an investment-property issue. ETF units are CGT assets too.

The ATO’s six-year main-residence choice still requires the dwelling to have been your main residence first. Buying as a rentvestor and moving in later does not retrospectively exempt the rental years. See rentvesting versus buying a home.

• Using a pre-2026 article that subtracts the annual loss from salary forever.
• Treating “new build” as whatever the brochure calls new, without the ministerial definition.
• Adding a handwritten tax refund to the Districts yield or rentvesting result.
• Assuming the six-year CGT rule covers a property that was never your home.
• Ignoring that 2027-28 is when quarantining starts, not when the cutoff date was.

The rentvesting calculator states that it is a pre-tax model. Income tax, land tax, CGT and the main-residence exemption are not included. Land tax is a state and territory schedule: thresholds, rates and home exemptions differ, and the valuation base is not a sale price. The yield calculator’s cash-flow line is also pre-tax. That is deliberate. One national tax engine cannot represent every ownership structure, income and acquisition date. A small pre-tax gap is not a decision.

This page does not compute your tax. It does not decide whether a dwelling is a new residential dwelling under the Act. It does not advise you to buy, hold or sell. Tax law is sensitive to individual circumstances. Close outcomes need a registered tax agent who has the contract date, the structure and your other income.

Read the current text of the Act and Treasury’s explainer for the cutoff and the 2027-28 start. Confirm acquisition time with the contract, not the settlement anecdote. Ask a registered tax agent whether the dwelling is an affected established interest, a grandfathered interest, or an excepted new residential dwelling. Then run the yield calculator without adding a refund. If the pre-tax line is negative, that is the cash you must fund unless advice says otherwise.