What counts as a new build for negative gearing
A new build is a home that adds to housing supply: a dwelling built on vacant land, or more dwellings replacing fewer. An off the plan apartment qualifies. A new house that replaces an old house does not. And the benefit belongs to the first buyer only.
Since the negative gearing change became law in June, "new build" has become the most valuable two words in property tax. Buy one and you keep the old rules. Buy anything else from here and, from July 2027, your rental losses wait instead of cutting your tax.
So the definition matters. Here is what Treasury has published, and where the gaps still are.
Key facts, as at 17 September 2026
- The test: the dwelling must "genuinely add to supply"
- Built on vacant land: qualifies
- More dwellings replacing fewer: qualifies
- Cannot have been sold before, unless first owned by the builder and occupied for no more than 12 months
- New build buyers also choose their capital gains method when they sell
- The detailed legal definition is left to a regulation that had not been made by mid September 2026
Sources: Treasury, Negative Gearing and Capital Gains Tax Reform, MLC adviser briefing
Yes or no: Treasury's own list
| Qualifies as a new build | Does not qualify |
|---|---|
| A newly built apartment bought off the plan | An established property extended to add bedrooms |
| A duplex built after knocking down one house | A new house built after knocking down an older, smaller house |
| Any home built on land that was vacant | A granny flat beside an established property |
| A newly built property occupied for less than 12 months before its first sale | A newly built property occupied for more than 12 months, then sold to an investor |
The pattern is simple once you see it. Count the homes before and after. If the number went up, it qualifies. If it stayed the same, it does not, however new the bricks are.
That is why a renovation never counts, and why "substantial renovations that do not increase supply will not be eligible" appears in Treasury's own words.
The catch nobody reads
Treasury's fact sheet has one sentence we would underline:
"Subsequent purchasers of the dwelling will not be able to access the 50 per cent CGT discount or negative gearing in relation to that property."
Read that as a seller. On the day you sell your new build, the next investor is buying an ordinary established home. They cannot negatively gear it. So the pool of investors willing to pay your price is smaller than the pool you bought from.
Owner occupiers do not care about any of this, so a new build that suits a family to live in will resell better than one that only ever suited investors. We would weigh that more heavily than the tax saving.
Two more advantages of a new build
A choice at sale. New build buyers can pick the 50% capital gains discount or the new indexation method when they sell, whichever is lower. Everyone else is moved to indexation for gains after 1 July 2027. We explain both in capital gains tax after the discount.
Easier lending. The banking regulator's limit on loans above six times income does not apply to loans for buying or building new dwellings. See borrowing power in late 2026.
What is still not settled
The Act does not spell out "new residential dwelling". It hands that job to a regulation. An adviser briefing from MLC dated 16 September 2026 still describes the term as undefined in the legislation, to be introduced by regulation.
Until that is made, the Treasury table above is the best guide there is, but it is a guide. Edge cases are open: a house and land package where the land was subdivided from a larger lot, a dual occupancy with one title, a conversion of an office into apartments.
If your purchase sits in one of those gaps, do not sign on an agent's say so. Get your accountant's view in writing.
Our view
A tax break is a poor reason to buy a property and a fair reason to prefer one good property over another. Start with whether you would want to own it if the rules were the same for everything. Then count the tax.
For the wider change, see negative gearing is now law. For buying before it is built, see off the plan after the Budget.
Frequently asked questions
Does a new build still qualify for negative gearing?
Yes. An investor who buys an eligible new build can keep using rental losses against wage income, before and after 1 July 2027.
Is a knock down rebuild a new build for negative gearing?
Only if it adds homes. A duplex replacing one house qualifies. A single house replacing a single house does not.
Does a granny flat count as a new build?
Not according to Treasury's list, where the granny flat sits beside an established property that is itself not eligible.
If I buy a nearly new property from another investor, can I negatively gear it?
No. Only the first buyer gets the new build treatment. A later buyer cannot negatively gear it and cannot use the 50% CGT discount on it.
Sources
- Treasury, Negative Gearing and Capital Gains Tax Reform fact sheet, Table 2, Budget 2026 to 27
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026
- MLC, Restrictions with negative gearing and residential property, 16 September 2026
- APRA, limit on high debt to income home loans
This is general information, not tax advice. Speak to your accountant before you buy.