If you own an investment property, or you are thinking about buying one, you have probably seen the deadlines about negative gearing. The Federal Government has announced reforms to negative gearing and capital gains tax that will start on 1 July 2027. The detail is worth understanding, but the headline for most existing investors is reassuring: if you already own, the rules you bought under are largely protected.
Here is a top level look at what is changing, and what it could mean for property investors across Brisbane’s western suburbs.
What is actually changing
From 1 July 2027, two main changes are proposed:
- Negative gearing on residential investment properties will be limited to new builds. In simple terms, the ability to use a rental loss to reduce your other taxable income, such as salary, will apply to newly constructed homes rather than established ones.
- The 50% capital gains tax discount will be replaced for individuals, trusts and partnerships with cost base indexation, which adjusts your gain for inflation, plus a new 30% minimum tax rate on capital gains.
The capital gains changes apply only to gains that build up after 1 July 2027, and the changes to negative gearing apply to residential property only. Commercial property and other assets such as shares are treated separately.
The dates that matter
Timing is everything with these reforms, and the Government has built in generous transition arrangements:
- The reforms were announced on 12 May 2026.
- If you owned an established investment property before that announcement, you can continue to negatively gear it in future years until you sell. Existing investors are effectively protected.
- Properties bought between the announcement and 30 June 2027 can be negatively geared up until 1 July 2027, but not after.
- Established properties bought from 1 July 2027 onward will not be eligible for negative gearing. Any rental losses can instead be offset against other residential property income, with unused losses carried forward to future years.
The new build opportunity
One of the clearest messages in the reform is the encouragement of new housing supply. Investors who buy a genuine new build will keep access to negative gearing, and will also be able to choose between the existing 50% capital gains tax discount or the new indexation method when they sell.
A new build generally means a home that adds to supply, such as a property built on vacant land, or a knock down rebuild that replaces one dwelling with several. A like for like rebuild or a renovation that does not add a dwelling would not qualify. For investors weighing up their next move, newly built property is shaping up as the more tax friendly option under the new settings.
What it could mean for the market
The Government’s own modelling expects the wider impact to be modest. House price growth is forecast to ease only slightly and temporarily, and the effect on rents is estimated at less than two dollars a week on the current median rent. These are meaningful changes for how investors plan, but they will not reshape the market overnight. Brisbane’s fundamentals, strong demand and tight rental supply, remain firmly in place.
The bottom line for investors
For most existing investors, the key takeaway is reassuring: your current arrangements are protected, with a long runway before anything changes. For those planning a purchase, it is worth understanding how an established property compares with a new build under the new rules. The right answer depends on your circumstances, so it is a good moment to speak with your accountant or financial adviser. If you would like to talk it through, our property management team is here to help.
What is changing with negative gearing?
From 1 July 2027, negative gearing on residential investment properties will be limited to new builds. The ability to use a rental loss to reduce other taxable income, such as salary, will apply to newly constructed homes rather than established ones.
Will the changes affect a property I already own?
No. If you owned an established investment property before the announcement at 7:30pm on 12 May 2026, you can continue to negatively gear it in future years until you sell. Existing investors are effectively protected.
What is happening to the capital gains tax discount?
For individuals, trusts and partnerships, the 50 per cent CGT discount will be replaced with cost base indexation, which adjusts your gain for inflation, plus a new 30 per cent minimum tax rate. This applies only to gains that build up after 1 July 2027.
What counts as a "new build"?
Generally a home that adds to supply, such as one built on vacant land or a knock-down rebuild that creates several dwellings. A like-for-like rebuild or a renovation that adds no dwelling would not qualify. New builds keep access to negative gearing and a choice of CGT method.
Should I do anything now?
For most existing investors there’s a long runway and current arrangements are protected. If you’re planning a purchase, it’s worth understanding how an established property compares with a new build, and the right answer depends on your circumstances, so speak with your accountant or financial adviser.
