I already own an established investment property — can I still negatively gear it after 1 July 2027?

The unit was bought years ago. The rent has never quite covered the loan interest, the strata and the rates, and every year that shortfall has come off your salary at tax time. Then the headline lands: negative gearing is being limited to new builds from 1 July 2027, and it is not a proposal — it is law.

The question that follows is the right one. Does this apply to the property I already own? For most people reading this, the answer turns on a single moment in time, and that moment has already passed.

What became law, and the sentence the headlines drop

On 12 May 2026, as part of the 2026–27 Federal Budget, the government announced reforms to negative gearing and capital gains tax. The ATO's guidance states that these measures are now law, enacted through the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026, and that they apply from 1 July 2027. One of the two changes limits negative gearing for residential property investments to new builds.

The next sentence on that same ATO page is the one that rarely makes it into a news headline: the impact of these changes on existing investments will be limited, because properties held at announcement — 7:30pm AEST on 12 May 2026 — are exempt from the negative gearing changes.

Worth saying plainly at the outset too: this is a residential property measure. Commercial property and other asset classes such as shares remain subject to existing arrangements.

Three groups, decided by one date

The Budget's transitional arrangements sort every established residential investment property into one of three groups.

Properties held at announcement — and the Budget papers spell out that this includes a property where a contract had been entered into but had not yet settled — will be allowed to be negatively geared in future years until sold. The stated reason is that taxpayers who already made investment decisions under the existing rules should not have those arrangements change.

Properties purchased between announcement and 30 June 2027 may be negatively geared during that period, but not from 1 July 2027.

Properties purchased from 1 July 2027 will not be able to be negatively geared. New builds are the exception throughout: they can continue to be negatively geared before and after 1 July 2027.

Two things follow from the wording that are easy to miss. The concession is tied to the property and lasts until it is sold — so selling a grandfathered property and buying another established one does not carry the treatment across. And it is the contract date that does the work, not settlement, which matters for anyone who signed off the plan in early May 2026.

'No negative gearing' does not mean the loss disappears

This is the part most often misread. From 1 July 2027, losses related to established residential investment properties purchased from 7:30pm AEST 12 May 2026 will only be deductible against other income from residential properties, including capital gains. Where an investor has excess losses, they will be able to carry that excess forward to offset residential property income in future years — the Budget explainer gives the reason directly, which is to ensure investors remain able to claim a deduction in future for costs such as maintenance.

So the deduction is quarantined rather than denied. What changes is what it can be set against: it stops reducing salary and wages, and starts waiting for rental profit or a capital gain from residential property. For a household that has been budgeting on a refund each July, that is a cash-flow change rather than a lost deduction.

The change applies to individuals, partnerships, companies and most trusts. Widely held trusts — for example, most managed investment trusts — and superannuation funds including SMSFs are excluded.

What counts as a new build — and what is still being drafted right now

The Budget explainer sets the shape of it. New builds are residential properties which genuinely add to supply: dwellings constructed on vacant land, or where existing properties are demolished and replaced with a greater number of dwellings. Knock-down rebuilds or substantial renovations that do not increase supply are not eligible.

There is a second-hand rule attached to it that deserves reading before you buy anything advertised as near-new. A new build cannot have been previously sold, unless it was first owned by the builder and not occupied for more than 12 months. Subsequent purchasers of the dwelling will not be able to access the 50% CGT discount or negative gearing in relation to that property — the Budget papers compare it to the way stamp duty exemptions for new builds work under some state schemes.

The detail is not final. On 4 August 2026 Treasury released exposure drafts of the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, and consultation closes on 21 August 2026. Those draft materials include the definition of a new residential dwelling and the types of housing investment exempt from the negative gearing limits. Under the draft, a property will generally be considered new where it genuinely adds to housing supply, provided it was acquired within 24 months of a certificate of occupancy being issued — extending the 12 months set out in the Budget, to give builders and developers time to sell stock on hand. The drafts also preserve existing eligibility for negative gearing, or for treatment as a new build, in certain circumstances including residential dwellings acquired from a spouse as a result of inheritance or relationship breakdown.

Treasury's own words are the guardrail here: following consultation, the final definition and exemptions will be included in primary legislation. An exposure draft is not law. The 24-month window is the direction of travel, not a number to sign a contract on.

The two misreadings doing the rounds

The first is that there is a deadline to beat, so the property should go before 2027. The transitional design says the opposite. A property held at announcement can be negatively geared in future years until it is sold, and the Budget papers state the intent directly — the transitional arrangements minimise the risk of asset market disruption, meaning there is no incentive to buy or sell properties before specific dates. Selling a grandfathered property early is how you give the concession away rather than protect it.

The second is that a knock-down rebuild turns an old property into a new build. Only if the number of dwellings goes up. A demolished house replaced by a greater number of dwellings can qualify; a house replaced by one better house is excluded by name, as are substantial renovations that do not add supply.

This is general information current as at August 2026 and not advice about your property — whether a particular property is grandfathered depends on the contract date and how the title is held, and the new build rules are still in draft. Two narrow, checkable things are worth doing this month. First, dig out the contract date for every residential investment property you hold and put it against 7:30pm AEST on 12 May 2026 — the contract date, not the settlement date. Second, if you are looking at anything being marketed as new or near-new, ask for the certificate of occupancy date and written confirmation that the dwelling has not been sold or occupied beyond the builder's ownership, because that is what the concession will hang on.

If you want to see what the property does to your position year by year, the investment property calculator on this site is built for exactly that, and our service for property investors is there for the annual work.