Negative Gearing Limited to New Builds
Following the official passage of the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, the rules for property investing in Australia have split in two. While established residential properties have lost major tax perks, the government has carved out an exclusive, highly lucrative exemption for new builds to stimulate housing supply.
If you are looking to expand your portfolio, investing in a new residential construction now offers a massive tax advantage over established housing.
1. Full Negative Gearing Power is Preserved
While established properties bought after Budget Night have had their tax deductions restricted, new builds keep full negative gearing benefits.
The Established Property Rule: If you buy an established house, any rental losses are "quarantined." You can no longer use them to reduce the tax on your salary. They are locked away to only offset future property profits.
The New Build Advantage: Investors in new builds can continue to deduct net rental losses directly against their personal wage or salary income. This ensures you maintain your year-on-year cash flow benefits and standard annual tax refunds.
2. You Keep a Unique Choice on Capital Gains Tax (CGT)
From 1 July 2027, standard investors are completely cut off from the old 50% CGT discount and forced onto the new CPI Indexation system. However, new build investments retain a structural tax choice:
When you eventually sell, you can choose to stick with the traditional 50% CGT discount (paying tax on only half your profit if held over 12 months), OR
You can opt into the new CPI Indexation system if high-inflation conditions make that more profitable for your specific timeline.
3. What Counts as an Eligible "New Build"?
To qualify for these exclusive tax protections, the investment must directly add new dwellings to the Australian housing supply. Eligible properties include:
Off-the-plan house and land packages or newly constructed apartments.
Constructing a brand-new home on previously vacant land.
A knock-down rebuild where an old home is demolished to construct new, higher-density housing (such as a duplex replacing a single house).
Note: Minor structural renovations or adding a backyard granny flat to an existing property generally will not qualify the main asset for full new-build status.
4. What This Means for Your Strategy
The tax landscape has fundamentally shifted. Buying an established property now requires you to absorb year-on-year rental losses until you sell, whereas a new build continues to shield your personal salary from high income tax rates immediately.
If you are planning your next property acquisition, navigating these split rules is critical. Contact your advisor to discuss your options and how this impacts your personal tax position.