What you need to know about the negative gearing changes

First, what is negative gearing?

Negative gearing is when the costs of owning an investment property, think mortgage interest, repairs, council rates, and management fees, exceed the rental income it generates. That shortfall becomes a tax deduction, reducing your overall taxable income. For decades, it’s been one of the most powerful and accessible tools in an Australian investor’s toolkit.

What’s actually changing

From budget night, the ability to negatively gear existing properties will be closed to new investors. If you were planning to purchase established housing stock and use negative gearing as part of your strategy, that door will shut. The changes come into full force from 2027, but the starting gun fires on budget night, so the window is narrow.

We understand that’s a real blow for anyone who had that path mapped out. Property investment takes planning and having the rules shift mid-strategy is genuinely frustrating. We hear you.

What isn’t changing

Here’s the part that matters most: if you’re already negatively gearing a property, you’re protected. Existing investors are exempt from the changes. Your current strategy remains intact; they call this grandfathering.

And negative gearing itself isn’t going away; it’s simply being redirected. Investors will still be able to access it, but only for new builds that meet the government’s new criteria. That’s an important distinction, and honestly, one we think opens a better conversation about where your money should be working.

Why new builds make even more sense now

New homes have been deliberately excluded from these changes, and we think that’s the right call. Australia is facing a significant housing shortage, and incentivising investment in new supply is part of how we address it. We’re glad the government recognised that.

But beyond the policy rationale, the financial case for new builds has always been strong, and it just got stronger. On top of retaining full negative gearing benefits, new properties come with depreciation advantages that established homes simply can’t offer. You can claim depreciation on the building structure, fixtures, and fittings, often generating thousands of dollars in additional tax deductions every single year. Stack that alongside the retained negative gearing, and the long-term capital growth potential of new stock in high-demand corridors and the numbers speak for themselves.

Building new isn’t a consolation prize. For a serious investor, it’s the smarter strategy.

The long game hasn’t changed

Tax policy shifts feel significant in the moment, and this one is. But the fundamentals of building wealth through property remain as solid as ever. The investors who adapt their approach now, rather than waiting to see how things settle, are the ones who come out ahead.

If you want to understand exactly how these changes affect your position and what a new build strategy could look like for you, we’re ready to walk through it together.

We know the tax impact, the long game, and the emotional weight of financial decisions. We plan for all three.