Australia’s property investment landscape is changing, with significant reforms to negative gearing and Capital Gains Tax taking effect from 1 July 2027.
The changes are intended to direct more investor demand towards new housing while reducing some of the competition first home buyers face when purchasing established properties.
But what changes if you already own an investment property? What should you consider if you are planning to purchase one?
Here are some of the key points to understand.
What is changing with negative gearing?
Negative gearing occurs when the deductible costs associated with an investment property are greater than the income it generates.
Under the existing rules, eligible investors can generally use that loss to reduce other taxable income, such as salary or wages.
From 1 July 2027, negative gearing for residential property will generally be restricted to eligible new builds.
This means investors purchasing an established residential property under the new rules will generally no longer be able to offset those property losses against unrelated income such as salary or wages.
Instead, eligible losses may be offset against income or capital gains from residential property, with excess losses carried forward for use against residential property income in future years.
What if you already own an investment property?
Existing investments made before 7:30pm AEST on 12 May 2026 are grandfathered.
This means that if you owned an investment property before the announcement—or had entered into a contract to purchase one before the cut-off—the existing negative gearing arrangements can continue to apply, subject to the legislation and applicable requirements.
The changes are therefore primarily directed towards future investment decisions rather than removing negative gearing from existing property investors.
What about established investment properties purchased after the changes?
You will still be able to purchase an established property as an investment.
What changes is the tax treatment of eligible losses associated with that property.
For properties subject to the new rules, those losses will generally not be available to reduce unrelated taxable income in the same way they have historically.
This could make cash flow, borrowing costs and property selection even more important when assessing an investment opportunity.
An established property may still be a suitable investment, but the numbers will need to make sense without relying solely on the traditional negative gearing benefit.
Are new investment properties treated differently?
Yes.
A major objective of the reforms is to encourage investors to direct more money towards new housing supply.
Eligible new builds can continue to access negative gearing under the new rules.
The intention is to redirect some investor demand away from competing for established homes and towards properties that increase Australia’s overall housing stock.
For investors considering their next purchase, the distinction between a new build and an established property could therefore become increasingly important.
What is changing with Capital Gains Tax?
Capital Gains Tax is also undergoing a significant change.
Currently, eligible individuals and trusts that hold an investment for at least 12 months can generally access a 50% CGT discount when calculating their taxable capital gain.
From 1 July 2027, the existing 50% CGT discount will be replaced for individuals, trusts and partnerships by a system using inflation-adjusted cost-base indexation together with a 30% minimum tax rate on applicable realised capital gains.
Rather than simply discounting an eligible capital gain by 50%, the new system is intended to adjust the asset’s cost base for inflation so tax is focused more closely on the real gain above inflation.
What happens to properties you already own for CGT purposes?
The CGT reforms apply prospectively rather than applying the new treatment to all growth an existing asset has experienced.
For existing investments, gains accrued before 1 July 2027 retain access to the existing CGT treatment. Gains accruing from that date will be subject to the new arrangements when ultimately realised.
This means investors holding existing assets will not simply lose the existing CGT treatment on all growth that occurred before the changes commenced.
Do new builds receive different CGT treatment?
Yes. This is another part of the Government’s effort to direct investment towards new housing supply.
Investors in eligible new residential properties will be able to choose between:
- The existing 50% CGT discount
- The new indexation and minimum-tax arrangements
The choice remains subject to the applicable rules and eligibility requirements.
Combined with continued access to negative gearing, this creates a deliberate tax distinction between investment in eligible new housing and established residential property.
What about your own home?
The existing main residence CGT exemption remains unchanged.
These reforms are primarily relevant to investment assets and do not remove the CGT exemption that may apply when an eligible owner sells their main residence.
Does this mean established property is no longer a good investment?
Not necessarily.
Tax treatment should only ever be one part of an investment decision.
Important considerations still include:
- Location
- Purchase price
- Rental return
- Interest costs
- Ongoing expenses
- Potential capital growth
- Your overall financial position
An established property with strong fundamentals may still represent a better investment than a new property purchased primarily because of a tax benefit.
Likewise, a new build should not automatically be considered a suitable investment simply because it may receive more favourable tax treatment.
Ultimately, the investment itself still needs to stack up.
What could the changes mean for your borrowing strategy?
From a lending perspective, the changes could make cash flow and loan structure increasingly important for property investors.
Your borrowing capacity can be affected by factors including:
- Your existing property portfolio
- Rental income
- Loan repayments
- Other debts and financial commitments
- The servicing policies used by different lenders
If you are considering another investment property, understanding your borrowing position before committing to a particular property can help you assess what may be realistically achievable.
It can also be worthwhile involving your mortgage broker, accountant and financial adviser early, particularly where the tax treatment of a proposed investment may influence your broader strategy.
Planning your next property investment?
The changes to negative gearing and CGT do not spell the end of property investment in Australia, but they change some of the incentives surrounding what investors purchase.
For prospective investors, the distinction between new and established property—and how each option fits into a broader investment and financial strategy—will become increasingly important.
At FI Collective, we can help you understand the lending side of your investment strategy, assess your borrowing capacity and compare suitable finance options across our lender panel.
For advice about the taxation implications of these changes, we recommend speaking with your accountant or qualified tax adviser.
Considering your next investment property? Speak with the FI Collective team about your finance options and borrowing position.
This information is general in nature and does not constitute financial, taxation or legal advice. Taxation legislation, lender policies and implementation details can change. You should obtain professional taxation and financial advice relevant to your circumstances. Information current as at September 2026.