What is changing with negative gearing

From 1 July 2027, negative gearing on residential investment properties will be limited to new builds. Investors who purchased an established property before 7:30pm AEST on 12 May 2026 retain their existing arrangements until they sell. Anyone buying an established residential property after that date will no longer be able to offset rental losses against their broader income,  losses will be quarantined and can only be applied against future residential property income.

Alongside this, the 50% capital gains tax (CGT) discount will be replaced by inflation-adjusted indexation from 1 July 2027 for most assets, with new builds offered a choice between the old and new arrangements. In short: new properties get the tax benefits. Established properties purchased after 12 May 2026 do not.

The tax benefit is real – but so is the growth gap

New properties typically carry a price premium over comparable established homes and tend to grow in value more slowly. You are buying at the top of the construction cost curve with no land value appreciation built in yet, and new estates often lack the scarcity and established amenity that drives long-term growth in established suburbs.

Historically, established properties in quality locations have consistently outperformed new builds in capital growth by approximately 1% per year. Consider an $800,000 purchase: an established property growing at 6% per annum reaches approximately $2.57 million after 20 years; a new build at 5% reaches approximately $2.12 million – a difference of more than $445,000 on the same starting price. Compare that to the tax benefit: at a top marginal rate of 45%, negatively gearing $15,000 per year saves around $6,750 in tax annually, roughly $33,750 over five years. Meaningful, but a fraction of the long-term growth difference.

What investors should actually be asking

The question is not ‘which property gives me the tax benefit?’ The question is: ‘which property will build the most wealth?’ That means focusing on fundamentals, location scarcity, proximity to employment, infrastructure investment, rental demand, and the quality of the land component relative to the building. A new apartment in an oversupplied precinct with negative gearing is still a weaker investment than a well-located established property without it.

If the loss of negative gearing on an established property creates genuine serviceability pressure, that is a real constraint worth planning around. But if the numbers work without the deduction, the long-term growth case for quality established property remains compelling.

Tax rules change.
Good locations do not.

Property investment decisions are best made on the fundamentals and with the negative gearing rules changing from 1 July 2027, it is worth reviewing your strategy sooner rather than later. Give us a call to discuss how these changes might affect your current or planned investments.

t: +61 7 3177 4120
e: advisors@hksrussell.com

Posted on June 15, 2026 by Charisse Russell - Articles