Negative gearing in Australia is changing, and this time it's not just talk. As part of the 2026-27 Federal Budget handed down on 12 May 2026, the Government announced reforms to negative gearing and capital gains tax arrangements for residential property, and these measures are now law. If you're an investor, or thinking about becoming one, here's exactly what's changing, when it takes effect, and who is protected.
What's actually changing
From 1 July 2027, negative gearing will be abolished for established residential properties purchased after 7:30pm on 12 May 2026. In plain terms: if you buy an existing house or unit after that date and time, you won't be able to claim the same negative gearing deductions against your taxable income once the new rules kick in.
That's the headline. But the detail is where it gets interesting, and where a lot of the panic in the media has been overstated.
Who's grandfathered (and doesn't need to worry)
If you already own an investment property, or you were under contract before the 7:30pm cut-off on 12 May 2026, you're grandfathered. That means you can continue accessing negative gearing under the current rules exactly as before. Nothing changes for your existing portfolio.
This is the single most important fact for existing investors, and it's worth repeating: owning a negatively geared property today does not expose you to these changes. The reform is forward-looking, targeting new purchases of established property from the cut-off date.
New builds are still exempt
Here's the part that should reshape investment strategy going forward: eligible new builds remain exempt from the changes. Investors buying new construction can still access both negative gearing and the 50% capital gains tax discount, just as they can today.
This is a deliberate policy lever. The Government wants to keep incentives pointed at new housing supply while cooling investor demand for existing stock. If you're planning your next purchase, new builds just became meaningfully more attractive relative to established homes.
The exemption most investors don't know about: SMSF and trust-held property
This is the detail that gets buried in most coverage, and it matters enormously if you're investing through a self-managed super fund. Properties held in widely held trusts and superannuation funds are exempt from these negative gearing changes altogether.
For SMSF property investors, this is a genuine structural advantage. While direct personal ownership of an established property purchased after 12 May 2026 will eventually lose negative gearing access, the same property held inside a compliant SMSF structure is carved out of the reform entirely. If you've been weighing up direct ownership versus an SMSF property strategy, this changes the maths.
It's worth getting personalised advice here rather than assuming SMSF ownership suits your situation by default, fund compliance, contribution caps and borrowing rules still apply, but the exemption itself is real and current.
Key dates to remember
- 12 May 2026, 7:30pm: Announcement takes effect as the cut-off for grandfathering. Contracts entered before this point retain current negative gearing rules indefinitely.
- 1 July 2027: The abolition of negative gearing for established residential property (purchased after the cut-off) formally commences.
- Ongoing: New builds and SMSF/trust-held property continue to access negative gearing and the CGT discount under the existing rules.
What this means for your next move
If you're weighing up a property purchase before the reform bites, three paths remain open to full negative gearing benefits:
- Buy before 1 July 2027 and lock in a contract, ideally before 12 May 2026 cut-off details apply to your specific situation, established property purchased after the cut-off will eventually lose access.
- Buy new. Eligible new builds keep both negative gearing and the 50% CGT discount indefinitely under current settings.
- Buy through an SMSF or widely held trust. This structure sits outside the reform entirely, which is worth serious consideration if you're already exploring SMSF property investment or comparing it against direct ownership.
If you're exploring how an SMSF property strategy stacks up now that this exemption is confirmed, it's worth reading through how SMSF duplex developments can work as a structure, or looking at why your SMSF needs its own bank account if you're setting one up for the first time.
Frequently asked questions
Will negative gearing be grandfathered for my existing property? Yes. If you owned the property, or were under contract, before 7:30pm on 12 May 2026, current negative gearing rules continue to apply to that property.
Does this affect capital gains tax too? Yes, the reform bundles negative gearing changes with capital gains tax arrangements for residential property. New builds retain the 50% CGT discount under current settings, and SMSF/trust-held property is similarly carved out.
Is negative gearing gone for good from 1 July 2027? Not entirely. It's abolished specifically for established residential properties bought after the 12 May 2026 cut-off. New builds, and property held in SMSFs or widely held trusts, keep access to negative gearing.
Should I rush to buy before the changes apply? That depends on your finance readiness, the property itself, and your overall strategy, this isn't advice to buy under pressure. But if you're already planning a purchase, understanding these dates and exemptions should shape which structure and property type you choose.
The bottom line
This reform rewards two things: buying new, and investing through the right structure. If you already own investment property, relax, you're grandfathered. If you're planning your next purchase, the SMSF and new-build exemptions deserve a serious look before you commit to an established property under the new rules.