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Real Estate Insight

Negative gearing

Negative gearing changes 2026: what changed and who's grandfathered

The short version: negative gearing isn't ending. From 1 July 2027 it stops for established homes bought after Budget night, and those losses are carried forward instead. Check where your property stands below.

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

When did you sign the contract?

Your property

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General information about the law as at October 2026, not advice about your situation.

The timeline

12 May 2026, 7:30pm AESTBudget night. Anything contracted before this is grandfathered.
26 June 2026The Tax Reform No. 1 Act becomes law.
26 August 2026The Tax Reform No. 2 Act extends grandfathering to surviving spouses, co-owners and relationship breakdowns, and to grandfathered homes when they're first rented out.
30 June 2027Last day losses on affected properties come off your other income.
1 July 2027Quarantine starts for affected properties. The CGT changes start for everyone.
From July 2028First tax returns with quarantined losses.

What actually changes

Under the old rules, a rental loss always came off your salary and other income. For an affected property, from 1 July 2027 the loss becomes a "quarantined amount" under section 26-155 of the Income Tax Assessment Act 1997. You keep it, with no time limit, and use it against rental profits from residential property and against residential capital gains. It just can't reduce the tax on your wages any more.

That changes cash flow more than it changes the long-run maths. You lose the yearly refund, but you get the deduction back later, often against a capital gain that's taxed in full after July 2027. Depending on growth and your income, you can end up better or worse off overall. The negative gearing calculator shows which, for your property.

Who isn't affected

  • Anyone who'd contracted to buy before 7:30pm AEST on 12 May 2026, for as long as they own it.
  • New residential dwellings: built on vacant land, knock-downs that add dwellings, and new homes occupied for less than 12 months before their first sale (a draft would make it 24 months from the occupancy certificate).
  • Shares, commercial property, super funds and widely held trusts.

Not new, for this purpose: a one-for-one knock-down rebuild, an extension, or a granny flat built next to an established home.

Common misunderstandings

  • "Negative gearing is abolished." It isn't. Losses on affected properties are carried forward, not lost.
  • "Refinancing resets the clock." It doesn't. The test is when you acquired the property.
  • "Renting out my old home makes it a new purchase." It doesn't. The test is when you acquired the home, not when you started renting it, and the Tax Reform No. 2 Act switches off the rule that would otherwise treat it as bought again when first rented (s26-155(3AA)). A home bought before Budget night stays grandfathered; one bought after is caught.
  • "The CGT cut-off is also 12 May 2026." No: 12 May is the negative gearing cut-off. The CGT changes start on 1 July 2027 for everything.

Questions people ask

Is negative gearing ending in Australia?
No. It's limited, not abolished. From 1 July 2027 it stops for established homes contracted after 7:30pm AEST on 12 May 2026: their losses are carried forward instead of reducing tax on other income. Properties held before then, new homes, shares and commercial property can be negatively geared as before.
When does negative gearing stop?
For affected properties, from the 2027-28 income year, which starts on 1 July 2027. Losses in 2026-27 can still be deducted against other income.
Is negative gearing grandfathered for existing properties?
Yes. Any residential property you'd acquired, or contracted to buy, before 7:30pm AEST on 12 May 2026 keeps negative gearing for as long as you own it.
Contract date or settlement date?
Contract date. Treasury says properties held at the announcement "including where a contract has been entered into, but not yet settled" keep negative gearing.
Can I still negatively gear a new build?
Yes, whenever you buy it, provided it meets the new residential dwelling definition. See new build vs established.
What happens to the losses I can't deduct?
They're quarantined: carried forward with no time limit, and used against rental profits from residential property and against residential capital gains, including when you sell.
Does refinancing affect grandfathering?
No. Refinancing doesn't mean you've acquired the property again. Interest deductibility still follows what the borrowed money was used for.
What if I inherit a property, or my partner dies?
Since the Tax Reform No. 2 Act (26 August 2026), grandfathering passes to a surviving spouse, to a co-owner who takes the deceased's share, and to a former partner who receives the property in a relationship breakdown settlement. Other heirs, such as children, appear to be treated as new buyers, so an inherited established home would be caught. More in our guide to inheritance, death and divorce.
If I move out and rent my home, can I negatively gear it?
If you bought it before 7:30pm AEST on 12 May 2026, yes: it stays grandfathered when you rent it out (s26-155(3AA), inserted by the Tax Reform No. 2 Act, from 2027-28). If you bought an established home after Budget night, losses from renting it are quarantined from 1 July 2027.
Does it apply to companies, trusts and SMSFs?
It applies to individuals, partnerships, companies and most trusts. Super funds (including SMSFs) and widely held trusts are excluded.
Will negative gearing changes reduce house prices or increase rent?
Treasury expects a small, temporary slowing in price growth (around 2% less over a couple of years) and a rent rise of less than $2 a week for a household paying the median rent.

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