03 9726 4650Negative Gearing Changes From 1 July 2027: What Property Investors Need to Know
Negative gearing an investment property has helped many Australian owners reduce their taxable income. But from 1 July 2027, the rules are changing for certain investment properties. If you already own a rental property or are thinking about buying one, when you buy could make a big difference to how you claim rental losses.
Here’s what you need to know.
Key takeaways
- Eligible properties you held before 7:30 pm AEST on 12 May 2026 are exempt from the new negative gearing rules.
- Established properties bought between 12 May 2026 and 30 June 2027 can be negatively geared only until 30 June 2027.
- From 1 July 2027, established properties generally can’t use rental losses against your salary or business income.
- Losses you can’t claim straight away can be carried forward against future residential property income, including relevant capital gains.
- Eligible new builds follow different rules, and the definition is strict.
First, what is negative gearing?
Negative gearing happens when a rental property costs more to run than it earns in rent.
For example, if your property earns $25,000 in rent over a year but your eligible expenses total $35,000, you have a rental loss of $10,000.
Under the existing rules, you can generally use that loss to reduce your taxable income from other sources, such as your salary or business income. This may reduce the tax you pay.
From 1 July 2027, some property owners will no longer be able to use rental losses this way.
Here's what changes if you already own a rental property
The good news is that the new negative gearing rules won't affect eligible properties held before 7:30 pm AEST on 12 May 2026.
Certain properties contracted for purchase before the deadline but not yet settled may also qualify.
If your property qualifies, you can generally continue claiming eligible rental losses under the existing rules.
The date matters if you’re buying an investment property
If you’re planning to buy a rental property, here’s how the new rules affect your ability to use rental losses.
| When you acquire the property | What it means |
|---|---|
| Before 7:30 pm AEST on 12 May 2026 | Eligible properties retain their existing negative gearing treatment. |
| Between 12 May 2026 and 30 June 2027 | You can generally use eligible rental losses against other income until 30 June 2027. Restrictions apply from 1 July 2027. |
| From 1 July 2027 | Established residential properties generally won’t qualify for negative gearing against other income, such as wages or business income. |
| Eligible new build | You can continue to claim eligible rental losses against other income under the applicable rules. |
What happens to rental losses you can't claim straight away?
Let's say you buy an established rental property in October 2026.
It earns $25,000 in rent a year, but your eligible expenses total $35,000. This gives you a rental loss of $10,000. Under the existing rules, you could generally use that loss to reduce your taxable income from other sources.
From 1 July 2027, you generally won't be able to use losses from that property to reduce your salary or business income. Instead, eligible losses can be carried forward and used against future residential property income, including relevant capital gains, subject to the rules.
The loss doesn't simply disappear, but you may have to wait longer to benefit from it.
What counts as an eligible new build?
The new rules treat eligible new builds differently, allowing investors to continue using negative gearing under the applicable arrangements.
Examples in the government's official tax explainer include:
- A newly constructed apartment bought off the plan.
- A house built on previously vacant land.
- A duplex built through a knock-down rebuild that replaces a single, freestanding house.
However, not every new or renovated property qualifies. For example, an extension to an established home or a granny flat added beside an existing property doesn't qualify under the government's examples.
Specific conditions also apply to previous sales and occupancy. If you're considering a new build partly for its tax treatment, check that it meets the relevant requirements before committing to a purchase.
What should you do before buying?
The changes don't automatically make an established rental property a bad investment. But they could affect your cash flow and the tax benefits you expected.
Before buying, consider:
- How much rental income the property is likely to generate.
- Whether you can cover expenses if the property makes a loss.
- Whether you can use those losses immediately or need to carry them forward.
- Whether the property qualifies as an eligible new build.
It's also worth keeping records of your rental income, interest expenses, repairs and other eligible costs.
Check out our rental property tax toolkit for more information about property expenses and deductions.
Need help understanding the changes?
The rules depend on when you acquired the property, whether it qualifies as a new build and how you own it. Trusts, companies and superannuation funds may also have different tax considerations.
At Clarity Taxation, we help property owners understand their tax obligations and make informed investment decisions.
If you're planning to buy a rental property or want to understand how the changes affect an existing investment, talk to us about your property or call 03 9726 4650.