If you own residential investment property or plan to buy, the new negative gearing rules can affect your after-tax position and investment strategy. The key dates are the Budget announcement time of 7:30pm AEST on 12 May 2026 and the 1 July 2027 start date.
The shift in negative gearing
Under the reforms, residential property losses for affected established properties acquired after the Budget announcement will generally be quarantined from 1 July 2027. That means losses may only be used against residential property income, including relevant capital gains, rather than against salary and wages.
Dates and carve-outs to confirm
- Grandfathering: Residential properties held at 7:30pm AEST on 12 May 2026 are exempt from the negative gearing changes.
- Start date: The new loss-quarantining rules apply from 1 July 2027.
- New builds: Negative gearing remains available for new residential properties designed to add to housing supply.
- Who is outside the measure: The ATO material notes exclusions for superannuation funds, including SMSFs, and widely held trusts.
The key point is not to wait until settlement or tax time. If your portfolio relies on negative gearing, review the numbers before buying, refinancing or restructuring.
Source: ATO – tax reform guidance on negative gearing and capital gains tax.
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