Negative Gearing Just Changed. The Date Everyone’s Talking About Isn’t the One That Matters
Published: 2 August 2026 · Foresight Property Insights
Most investors heard the headline in May and assumed negative gearing was over. It isn’t — not for everyone, and not yet. The federal government’s proposed negative gearing and CGT reform actually runs on two separate dates, and mixing them up is the single most common mistake we’re seeing investors make right now. One date decides what gets protected. The other decides when the new rules actually start biting. Here’s the difference, and what it means depending on what you already own — or are about to buy.
The shift in one sentence
The old system rewarded holding investment assets. The new system rewards adding housing supply. Everything below is really just that principle working itself out across negative gearing, CGT, and trust structures.
| Old policy | New policy |
|---|---|
| Negative gearing available for existing and new homes | Negative gearing focus shifts to new builds |
| CGT: 50% discount for assets held 12+ months | CGT: cost base indexed to CPI, plus a 30% minimum tax |
| Investor incentive skewed toward capital growth | Investor incentive skewed toward adding new supply |
The two dates that actually matter
12 May 2026, 7:30pm AEST — the grandfathering line
This is the date most headlines led with, and it’s the one causing the confusion. Properties already held, or already under contract, before this moment keep the existing negative gearing rules for as long as you hold them. This date decides what’s protected — it does not, on its own, mean new rules are already in force.
12 May 2026 to 1 July 2027 — the transition window
Established properties bought in this window can still follow the old rules in the short term, but — and this is the part worth sitting with — they are not grandfathered. Buy an established property today, and you’re borrowing time on the old rules, not locking them in.
1 July 2027 — when the new rules actually start
From this date, losses on newly purchased established residential investment properties get quarantined. This is the date that determines when the new mechanics kick in — and it’s more than a year after the date everyone’s actually talking about.
In one sentence: 12 May 2026 decides what’s grandfathered. 1 July 2027 decides when the new rules begin. Most of the anxiety we’re hearing from clients is actually about the wrong one of these two dates.
Established property vs new build: the gap is widening
| Buying established | Buying new |
|---|---|
| Losses can no longer directly offset salary after 1 July 2027 | Rental losses can still offset salary and other taxable income |
| Unused losses can be carried forward | Choice between the 50% CGT discount or indexation plus minimum tax |
| Future gains move to the new CGT method | Property must genuinely add housing supply to qualify |
The practical read: the tax gap between “buy established” and “buy new” is about to get materially wider than most investors are currently pricing in.
Where does the loss actually go now?
Under the old system, a rental loss could offset salary, business income, or any other taxable income in that year. Under the new system, losses from newly purchased established residential property stay ring-fenced inside a residential-property income “bucket.”
Worked example: Property A runs a $10,000 loss, Property B runs a $6,000 profit. Under the new rules, the remaining $4,000 can’t reduce your salary tax bill anymore — it carries forward against future property income or related gains instead of landing on this year’s return.
CGT: taxing the real gain, not the nominal one
Old policy: calculate the nominal capital gain, apply the 50% discount if held over 12 months, tax the discounted figure at your marginal rate.
New policy: index the cost base to CPI first, calculate the real gain, then apply a minimum 30% tax rate to that real gain.
The shift is from taxing a discounted nominal number to taxing an inflation-adjusted real one — which changes the maths more than the headline “30%” figure suggests on its own.
What about trusts?
From 1 July 2028, discretionary trusts move to a 30% minimum tax. Under the old logic, trust income could be distributed across beneficiaries to access different marginal rates. That low-tax-distribution benefit compresses under the new rules — but trusts don’t become pointless. Asset protection, estate planning, and family wealth structuring reasons for using a trust are untouched by this change. The mistake would be using a trust only for the tax-rate arbitrage that’s now going away.
Two questions nobody has fully answered yet
How will banks recalculate borrowing power? If rental losses can no longer offset salary for established-property purchases, lenders may reassess serviceability differently — which could change how much you can actually borrow, independent of the tax outcome itself.
Will this actually produce more housing supply? Redirecting capital toward new builds is the policy’s stated goal. Whether the market can deliver on that depends on planning approvals, construction costs, labour capacity, and infrastructure — none of which a tax change fixes on its own.
What this means for you, depending on where you sit
- Already own investment property, or under contract before 12 May 2026: you’re grandfathered. No action forced, but worth reviewing your structure now while the rules are stable.
- Planning to buy established property in the next 12 months: you’re buying into the transition window — old rules apply short-term, but you’re not locked in. Timing and structure both matter more than usual right now.
- Considering a new build: the tax settings are moving in your favour relative to established property — worth modelling both paths side by side before deciding.
This is exactly the kind of decision our Strategic Planning session is built for — a 90-minute, numbers-first session to pressure-test your borrowing power, structure, and next move against rules like these before you commit to either path.
FAQ
Does negative gearing still exist in Australia?
Yes. It isn’t being abolished — it’s being narrowed. New builds retain the ability to offset rental losses against salary and other income. Established properties purchased after the transition period lose that ability, though losses can still be carried forward.
What is the negative gearing grandfathering date?
12 May 2026, 7:30pm AEST. Properties already held or already under contract at that moment keep the existing negative gearing rules for as long as they’re held.
When do the new negative gearing rules actually start?
1 July 2027. Properties bought between 12 May 2026 and 1 July 2027 can follow the old rules short-term but are not grandfathered.
How does the CGT change work?
The cost base is indexed to CPI to calculate the real capital gain, which is then taxed at a minimum rate of 30% — replacing the old approach of a flat 50% discount on the nominal gain.
Should I buy an established property before the rules change?
It depends on your timeline, structure, and borrowing strategy — there’s no single right answer, which is exactly why this is worth modelling against your own numbers rather than reacting to the headline date alone.
This article is general information only and should not be taken as tax, legal, or financial advice. Investors should seek advice specific to their own circumstances.