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Real Estate Insight

Negative gearing

Negative gearing calculator: your cash flow under the old and new rules

Put in the property and your income. You'll see the tax benefit each year, which losses get carried forward from 1 July 2027, and what the change does to your result when you sell, compared with the same property as if the 2026 rules had never passed.

By the Real Estate Insight team · Last reviewed 4 October 2026 · How we check our numbers

Before 7:30pm on 12 May 2026 keeps the old rules.

The property is

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Running costs, land tax, depreciation and growth use our 2026 defaults for the state and property type. Change any of them in the full analysis.

Established, bought after Budget night: losses quarantined from 1 July 2027

By the time you sell, the 2026 rules leave you $21,317 ahead.

In 2026-27 the property makes a loss of $26,426 for tax and you're $471 a week out of pocket after tax. From 2027-28 the loss no longer reduces the tax on your other income. It's carried forward and used against later rental profits and the capital gain when you sell. Here those losses cancel most of the gain, so the tax you save at the end outweighs the refunds you lose along the way.

In today's dollars
$11,169 better off
Annual return
4.74% vs 4.57% under the old rules

Tax benefit each year

2026 rules vs if they'd never passed
YearRental profit / lossTax benefit nowUnder old rulesCarried forward
2026-27 -$26,426 $8,456 $8,456 –
2027-28 -$25,480 $0 $8,154 $25,480
2028-29 -$24,484 $0 $7,835 $49,964
2029-30 -$23,437 $0 $7,500 $73,401
2030-31 -$22,334 $0 $7,147 $95,735
2031-32 -$21,028 $0 $6,729 $116,764
2032-33 -$19,807 $0 $6,338 $136,571
2033-34 -$18,521 $0 $5,927 $155,091
2034-35 -$17,166 $0 $5,493 $172,257
2035-36 -$15,740 $0 $5,037 $187,997
Total $8,456 $68,615

When you sell after 10 years

CGT, 2026 rules
$2,435
CGT, old rules
$83,911
Losses used against the gain
$187,997

Ahead after selling, all cash in and out counted: $187,012 under the 2026 rules, $165,695 if they'd never passed.

Open in the full analysis

About this estimate. General information, not tax or financial advice. Resident individuals, latest legislated tax rates, our default running costs and growth for VIC, and the sale taxed under the rules for its date. "New" is applied by property type: the final definition of a new residential dwelling is still a draft. Future amounts are in dollars of the day; today's-dollar figures use 2.5% inflation. Real Estate Insight is not a registered tax agent.

How negative gearing works

A property is negatively geared when its deductible costs (interest, rates, insurance, management, repairs and depreciation) are more than the rent. The shortfall is a rental loss. Until the 2026 changes, that loss always came off your salary and other income, so the tax office covered part of it: a $20,000 loss for someone on $120,000 cut their tax by about $6,400.

What changed in 2026

The Tax Reform No. 1 Act, passed in June 2026, quarantines rental losses on some properties from the 2027-28 income year:

  • Affected: established homes contracted after 7:30pm AEST on 12 May 2026 (Budget night).
  • Not affected: anything you'd already contracted to buy by then, new homes, and properties held by super funds or widely held trusts.
  • From 1 July 2027, an affected property's loss can't reduce tax on your other income. It's carried forward and used against later rental profits and residential capital gains. Losses in 2026-27 can still be deducted as normal.

The surprise: it isn't always worse

Losing the yearly refund hurts your cash flow. But the carried-forward losses don't vanish: when you sell, they come off the capital gain dollar for dollar, and after 1 July 2027 that gain is only taxed on growth above inflation. If the losses are large and the property grows well, they can wipe out most of the CGT. Whether you end up ahead depends on growth, your income and how long you wait for the benefit.

Here's the same established Victorian house under both sets of rules: $750,000, 20% deposit, 6.55% P&I, $490 a week rent, contract signed October 2026, sold after 10 years. All other costs use our 2026 defaults.

Owner's income and growthAhead after selling, 2026 rulesOld rulesAnnual return, 2026 vs old
$120,000, 5% growth$187,046$165,6944.74% vs 4.57%
$200,000, 5% growth$188,570$180,1524.80% vs 5.05%
$120,000, 3% growth-$19,584$5,785-0.61% vs 0.19%

At 5% growth the losses used at sale more than make up for the lost refunds, though a high earner still does worse once you allow for waiting ten years for the money. At 3% growth there's little gain to absorb the losses, and the change costs about $25,000. Use the calculator for your own numbers rather than either rule of thumb.

Grandfathering, in practice

  • The contract date decides it. A contract signed before 7:30pm on 12 May 2026 is grandfathered even if it settled later.
  • Refinancing is fine. It doesn't count as acquiring the property again.
  • Turning your home into a rental: a home bought before Budget night keeps negative gearing when you rent it out. The Tax Reform No. 2 Act makes sure the rule that treats a home as bought again when it's first rented doesn't count (s26-155(3AA)). A home bought after Budget night is caught.
  • Death and separation: a surviving spouse, a surviving co-owner and a former partner who takes the property in a settlement keep the grandfathering, under the Tax Reform No. 2 Act.

What this calculator doesn't cover

It models one property owned by Australian resident individuals. Quarantined losses here only offset this property's rent and gain: if you own other residential properties, losses can also be used against their profits, which this page doesn't show. Trusts, companies and SMSFs aren't modelled.

Questions people ask

Can I still negatively gear a property in 2026?
Yes. Every investment property can be negatively geared in the 2026-27 year. From 1 July 2027 the change only bites on established homes bought after 7:30pm AEST on 12 May 2026. Properties you held before then, and new homes, can be negatively geared as before.
When does negative gearing stop?
For an established home contracted after Budget night, losses from 1 July 2027 (the 2027-28 income year) can no longer reduce tax on your salary or other income. Everything else carries on as before.
Do I lose the rental losses?
No. They're carried forward with no time limit and used against later rental profits from residential property and against residential capital gains, including the gain when you sell.
Does the contract date or the settlement date count?
The contract date. Treasury's explainer says properties held at the announcement "including where a contract has been entered into, but not yet settled" keep negative gearing.
Does refinancing break grandfathering?
No. Refinancing doesn't mean you acquire the property again. Whether the interest is deductible still depends on what the borrowed money was used for.
What counts as a new home?
A dwelling built on vacant land, or a knock-down that adds dwellings, bought from the builder or occupied for less than 12 months before its first sale (an August 2026 draft proposes 24 months from the occupancy certificate). One-for-one knock-down rebuilds, extensions and granny flats next to an established home don't count. The definition is set by a ministerial instrument that wasn't final in October 2026.
What happens if my partner dies or we separate?
Since the Tax Reform No. 2 Act (assented 26 August 2026), grandfathering carries over to a surviving spouse, to a co-owner who takes the deceased's share, and to a transfer on relationship breakdown. Other heirs, such as children, appear not to be covered.
Are shares or commercial property affected?
No. The quarantine only applies to residential dwellings.

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