New build vs established investment property after the 2026 tax changes
Since Budget night, new builds keep negative gearing and established homes don't. That makes the new build look like the obvious choice, until you put growth into the comparison. Set up both properties and see which one finishes ahead, and by how much.
Contracted today, so rental losses are quarantined from 1 July 2027 and plant & equipment isn't deductible.
After 10 years, all cash in and out
The established property finishes $66,533 ahead.
The established property would need to grow at 3.7% a year to finish level with the new build. Growth is the assumption that matters most here, so test a few.
New build
Established
Cash to buy
$168,675
$168,675
Stamp duty
$34,070
$34,070
Depreciation, year one
$16,050
$0
After tax, per week, year one
-$233
-$332
After tax, per week, average
-$222
-$365
Tax benefit while you own it
$80,117
$5,475
Losses carried forward (quarantined)
$0
$100,441
Sale price
$916,889
$1,009,430
CGT on sale
$57,918
$7,248
Ahead after selling
$108,420
$174,953
Annual return
4.12%
5.46%
CGT method: new build "Split at 1 July 2027: discount, then indexation", established "Split at 1 July 2027: discount, then indexation".
About this estimate. General information, not financial advice. Both properties are bought today by one resident individual with a P&I loan at our default rate; running costs, depreciation and land tax use our 2026 defaults for the state and type. "New" assumes the property meets the new residential dwelling definition, which is still a draft. Amounts are in dollars of the day they happen.
What each side has going for it
The new build keeps full negative gearing, so a rental loss keeps cutting the tax on your salary every year. It also comes with bigger depreciation, because fittings in a new home can be claimed. In our default comparison that's worth about $100 a week in year one.
The established property tends to have more land in the price and a longer track record of growth. Its losses from 1 July 2027 are quarantined rather than lost: they pile up and come off the capital gain when you sell. On a property that grows well, that can cancel most of the CGT.
Growth decides it
Here's the default comparison: two $650,000 Victorian apartments renting for $565 a week, bought today by someone on $120,000 with a 20% deposit, held for 10 years.
Growth, new vs established
New build ahead by
4% vs 4%
-$356 (a dead heat)
3.5% vs 4.5%
-$66,533
3% vs 5%
-$118,968
With the same growth, the new build's tax advantages while you hold it and the established property's CGT advantage when you sell almost exactly cancel out. So the question isn't really about tax. It's whether the established property will grow faster. In this example it only needs to grow 0.19 percentage points a year faster than a new build growing at 3.5% to finish ahead.
Things the numbers can't see
Resale. The next investor who buys your new build doesn't get new-build treatment, which narrows your buyer pool.
Supply. New apartment towers often sit among similar stock, which can hold back rents and prices.
Builder risk. Off-the-plan purchases can be delayed, valued below the contract price at settlement, or affected by defects.
Stamp duty. Some states give off-the-plan or new-home concessions. Tick "bought off the plan" to apply them where they exist.
What this calculator doesn't cover
Both properties are owned by one Australian resident individual. It doesn't model house-and-land packages with separate land and build contracts, construction-period interest, trusts or SMSFs. The final definition of a new residential dwelling may change who qualifies.
Questions people ask
Can you still negatively gear a new build?+
Yes. New residential dwellings keep negative gearing under the 2026 rules, whenever you buy them. Losses on an established home bought after 7:30pm on 12 May 2026 are quarantined from 1 July 2027.
What counts as a new build for negative gearing?+
Treasury's list: an apartment bought off the plan, a dwelling built on vacant land, a knock-down that replaces one house with more dwellings, or a newly built home occupied for less than 12 months before it's first sold. A one-for-one knock-down rebuild, an extension or a granny flat next to an established home doesn't count. The legal definition is set by a ministerial instrument; an August 2026 draft uses 24 months from the occupancy certificate. Check the final version before you sign.
Does a new build keep the 50% CGT discount?+
It can. A new residential dwelling can use the 50% discount on its whole gain instead of indexation and the 30% minimum tax, whichever is cheaper.
What happens when I sell a new build to the next investor?+
They don't get the new-build treatment: Treasury's explainer says subsequent purchasers can't access negative gearing or the 50% discount on that property. That shrinks the pool of investors who'll pay top dollar for it, which matters for your resale price.
Is depreciation worth more on a new build?+
Usually. You can claim capital works on the building and plant and equipment on fittings. On an established home bought since May 2017, plant and equipment isn't deductible for individuals, and after Budget night the remaining deductions on an established home only add to quarantined losses.