Negative gearing in 2026: new builds keep the tax benefits
The 2026 federal budget reshaped property tax — and put new homes firmly ahead. Established homes bought from 12 May 2026 lose negative gearing; new builds, including off-the-plan apartments and house and land packages, keep it.
The short version
From 1 July 2027, negative gearing is limited to new builds. Investors who buy a new home — off the plan, house and land, a new townhouse — keep the two tax benefits that have made property investing work in Australia for decades:
- Negative gearing. A rental loss on a new build can still reduce the tax you pay on your salary and other income, every year, before and after 1 July 2027.
- The 50% capital gains discount. When you sell, you choose whichever works out better for you: the 50% discount, or the new inflation-indexed method.
Buyers of established homes from 12 May 2026 get neither from 1 July 2027. The changes are now law.
What changed for established homes
- Bought from 7:30pm AEST, 12 May 2026: negative gearing stops on 1 July 2027. Rental losses can then only be used against income from residential property — not against salary or wages — and are carried forward until there is property income to absorb them.
- Capital gains from 1 July 2027: the 50% discount is replaced by cost-base indexation, with a 30% minimum tax rate on the gain. This applies across assets held by individuals, partnerships and trusts, not just property.
- Homes already owned (or under contract) on 12 May 2026 keep negative gearing until sold.
What it is worth: the government's own example
The Treasury explainer uses a rental loss of $14,810 in a year. Offset against salary, that loss is worth a tax saving of about $4,761 to someone earning $80,000, and about $6,961 to someone earning $210,000. On a new build, that saving still comes off your tax in the year the loss is made. On an established home bought after the announcement, it is deferred until the property produces income to use it against.
Put simply: for an investor who relies on negative gearing to make the numbers work, the new build is now the way to keep doing it on residential property bought from here on.
What counts as a new build
New builds are homes that genuinely add to housing supply. The government's explainer lists as eligible:
- a newly constructed apartment bought off the plan;
- any residential construction on previously vacant land — which is what a house and land package is;
- a knock-down rebuild that replaces one home with more than one, such as a duplex replacing a house;
- a newly built home occupied for less than 12 months before it is first sold.
The benefits go to the first owner of the new home — so buying off the plan, before the home is even finished, puts you first in line.
Depreciation: the other advantage of new
Since 2017, residential investors can only claim depreciation on fixtures and fittings that were new when they bought them. In a new build, every appliance, blind, carpet and air-conditioner is new, and the construction cost itself can be claimed as capital works over time. In an older home most of that isn't claimable. A quantity surveyor's depreciation schedule shows exactly what a particular property allows — for a new home it can add thousands of dollars a year in deductions, without any extra cash outlay.
Who else is covered
Self-managed super funds and widely held trusts sit outside the negative gearing changes. Commercial property and shares aren't affected by the negative gearing limits either.
Sources: ATO — reforming negative gearing and capital gains tax; Budget 2026–27 tax explainer (PDF); ATO — second-hand depreciating assets.
Common questions
Can I still negatively gear an off-the-plan property?
Yes. Eligible new builds — including apartments bought off the plan and homes built on vacant land — can still be negatively geared, before and after 1 July 2027. The limit applies to established homes bought from 12 May 2026.
Do new builds keep the 50% capital gains tax discount?
Yes. An investor who buys an eligible new build can choose, when they sell, between the 50% discount and the new indexation method — whichever gives the better result.
Is a house and land package a new build?
Residential construction on previously vacant land is listed as an eligible new build in the government's explainer, which covers a typical house and land package.
When do the changes start?
1 July 2027. Established homes bought between 12 May 2026 and 30 June 2027 can be negatively geared until 30 June 2027 only; homes held before 12 May 2026 are unaffected until sold.
General information, current at the date above. Grants, concessions and tax rules have eligibility conditions this page summarises; it isn't personal tax, legal or financial advice. Confirm your eligibility with the relevant government agency, your lender or your accountant before you rely on it.