Property investors have recently seen significant discussion about the Federal Government’s changes to negative gearing. While the reforms have now been legislated, it is important to understand that the new rules do not begin until 1 July 2027, and many existing property investors will not be affected.
Currently, if the expenses associated with an investment property exceed the rental income it generates, the resulting loss can generally be used to reduce other taxable income, such as salary and wages. This is commonly known as negative gearing.
From 1 July 2027, negative gearing concessions for residential property will largely be limited to newly built residential properties. The Government's stated aim is to encourage investment in new housing supply and improve housing affordability for first-home buyers.
For many investors, the answer is no.
Residential investment properties owned before 7:30 pm AEST on 12 May 2026 are generally grandfathered under the current rules. This means investors who already owned affected properties at that time can continue to access negative gearing benefits under the existing arrangements. As a result, the reforms are primarily aimed at future investment decisions rather than existing holdings.
Investors who purchase an established residential property after the announcement date will still be able to claim legitimate property expenses and rental losses. However, from 1 July 2027, those losses generally will no longer be available to offset non-property income such as wages or business income. Instead, losses can be:
The Government has retained favourable treatment for investment in new residential properties. Investors who purchase qualifying new builds will generally continue to be able to use rental losses to offset other assessable income, even after 1 July 2027.
This reflects the Government’s intention to direct investment towards increasing Australia's housing stock.
There is no need for existing property owners to make rushed decisions. The reforms do not commence until 1 July 2027, and grandfathering provisions mean many current investors will see little or no immediate impact.
However, anyone considering purchasing an investment property should carefully evaluate how the new rules may affect the after-tax returns of their proposed investment. The type of property purchased, the timing of acquisition, expected rental yields and long-term growth prospects may all become increasingly important factors in the decision-making process.
As with any significant tax change, seeking personalised financial and taxation advice can help ensure your investment strategy remains aligned with your long-term goals.