Tax Planning | Compliance
Navigating Negative Gearing: What Property Investors Need to Know by Mid-2027
Negative gearing is being limited to new builds from July 2027—find out how investors with existing properties or contracts can plan ahead.
By NomadicTax Research Team • 5-8 min read • June 18, 2026
## What is changing
As part of the 2026-27 Budget, the Australian Government is limiting **negative gearing** for residential property to **newly built dwellings** acquired after **7:30pm AEST on 12 May 2026**, with changes coming into effect **1 July 2027**. Properties purchased or contracted before that time (for existing established properties) are **grandfathered**—you can continue with negative gearing until they are sold. ([austax.tools](https://austax.tools/tax-insights/whats-changing-australian-tax-2026-27/?utm_source=openai))
## Examples & edge cases
* If you own an established investment property bought before 7:30pm on 12 May 2026, you’ll still be able to offset net rental losses under current rules until you dispose of it.
* A newly built duplex through a knock-down rebuild that increases housing supply generally qualifies as a “new build” for these rules. Substantial renovations that don’t increase supply may **not** qualify.([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000004zR0z/p00419385?utm_source=openai))
## Compliance & planning tips
1. **Check your contract date**: Whether you entered into contract (or ownership) before 12 May 2026 determines grandfathering status.
2. For those planning new investments: targeting apartments, new build houses or even knock-down rebuilds (if approved) can preserve deductibility under negative gearing.
3. For existing properties: maximize other rental income strategies or explore carry-forward opportunities. Losses from established property won’t be deductible against non-residential income post-July 2027.
4. Determine what qualifies as “new build” once legislation/regulation defines it clearly. ATO guidance or fact sheets will clarify eligibility.
## Implications and strategic insight
* Property investors may prefer new-build developments to maintain full negative gearing benefits. May affect property supply, pricing and development trends.
* Existing owners have incentive to postpone disposals until after the effective date if they wish to maintain current gearing rules.
* Lenders, planners and developers should monitor final rules given their influence on investment returns, rental yields & financing models.
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