Negative gearing changes: what property investors need to know

Tuesday's Federal Budget confirmed what many property investors had been expecting: negative gearing for residential property will effectively be limited to new builds from 1 July 2027. Existing investment properties owned before budget night on 12 May 2026 will retain access to the current negative gearing rules until disposed of.

Established properties purchased between Budget night and 30 June 2027 can still be negatively geared during that transition period. However, from 1 July 2027, losses from those properties will no longer be deductible against personal taxable income. Instead, losses will only be able to offset residential property income and be carried forward into future years.

Importantly, new residential properties that add to housing supply will continue to qualify for negative gearing both before and after the changes begin, with the government aiming to direct more investor demand toward new housing supply.

The Budget also confirmed changes to capital gains tax from July 2027, although eligible new residential investments will continue to receive concessional treatment.

While the reforms mark a major shift in housing policy, they also create stronger incentives for investors to back new housing projects at a time when Australia badly needs more homes.

About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.