Negative gearing is now law: what changes on 1 July 2027
Negative gearing has been limited, not abolished. Under a law passed in June 2026, from 1 July 2027 rental losses on an established home bought after 7.30 pm on 12 May 2026 can no longer reduce your wage income. Properties you held before that moment are protected until you sell, and new builds keep negative gearing.
The Budget announced it in May. Parliament passed it on 25 June, and it became law the next day as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026.
So this is no longer a proposal to argue about. It is the rulebook. And the rulebook asks one question before any other: when did you buy?
Key facts, as at 29 June 2026
- Law: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Royal Assent 26 June 2026
- Cut off: 7.30 pm, 12 May 2026 (Canberra time)
- Start date: 1 July 2027
- Still allowed: properties held at the cut off, and new builds
- Applies to individuals, partnerships, companies and most trusts
- Excluded: superannuation funds, including SMSFs, and widely held trusts
Sources: Treasury, Negative Gearing and Capital Gains Tax Reform, the Act
Four buyers, four outcomes
| Your situation | Can you negatively gear? |
|---|---|
| You owned the property, or had signed a contract, before 7.30 pm on 12 May 2026 | Yes, in future years, until you sell |
| You bought an established home after that, before 1 July 2027 | Yes until 30 June 2027. Not from 1 July 2027 |
| You buy an established home from 1 July 2027 | No. Losses are carried forward |
| You buy a new build, at any time | Yes, before and after 1 July 2027 |
The first row is the one most existing investors care about. Treasury is direct about it: "Every existing property owner will be able to continue to negatively gear any properties held before the time of announcement."
There is no cap on how many properties that covers.
What "carried forward" really means
For the properties that are caught, the loss does not vanish. It is set aside. You can use it against rent from residential property in later years, or against the capital gain when you sell a residential property.
What you lose is timing. Today a loss cuts your tax this year. Under the new rule it waits.
Treasury gives a worked case. It takes a rental loss of $14,810, which is roughly the average loss claimed by people in the top tax bracket in 2022 to 23.
| Tax saved this year | |
|---|---|
| Person on $80,000 | $4,761 |
| Person on $210,000 | $6,961 |
Source: Treasury, Negative Gearing and Capital Gains Tax Reform fact sheet, Budget 2026 to 27
A buyer caught by the new rule does not get that $4,761 or $6,961 back at tax time. They carry the $14,810 forward instead.
Over a full holding period, the cost can be smaller than people fear. Treasury follows an investor on $100,000 who buys an established home for $519,000 after the start date and sells it ten years later. She builds up $22,879 of losses in the first five years, uses them against rent and her gain later, and ends up paying $186 more tax in total than under the old rules.
We would not lean on one example. Her property turns cash positive after five years. If yours never does, your losses sit unused for much longer. The real cost is the cash you must find each year without a refund to help.
What we think this changes
Holding beats selling for most existing owners. A protected property loses its protection the day you sell it. The next owner cannot negatively gear it, and neither can you on a replacement, unless the replacement is a new build.
Cash flow now matters more than the tax return. If you are buying an established property today, test whether you can carry the shortfall from your own pocket from July 2027.
New builds carry a tax advantage, and a catch. The second owner of a new build does not inherit it.
Capital gains tax changed in the same law too. We will cover that separately.
If you want to see what we wrote in the days after the Budget, before the law passed, that post is still up as it was.
Frequently asked questions
Has negative gearing been abolished in Australia?
No. It has been limited. From 1 July 2027, rental losses on established homes bought after 7.30 pm on 12 May 2026 can only be used against income from residential property. Properties held before then, and new builds, keep negative gearing.
Can I still negatively gear a property I already own?
Yes. A property you held at 7.30 pm on 12 May 2026, including one under contract but not yet settled, can be negatively geared in future years until you sell it.
What happens to rental losses under the new rules?
They are not lost. Losses on affected properties are carried forward and can be used against future residential property income, including a capital gain when you sell.
Does the negative gearing change apply to SMSFs and shares?
No. Superannuation funds, including SMSFs, and widely held trusts are excluded. The change covers residential property only, so shares and commercial property are not affected.
Sources
- Treasury, Negative Gearing and Capital Gains Tax Reform fact sheet, Budget 2026 to 27
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026
This is general information, not tax advice. The rules have detail we have not covered. Speak to your accountant before you act.