Negative gearing and CGT changes: what investors need to know now.
The 2026 reforms have changed the rules. Negative gearing and the capital gains discount are now restricted to new-build residential investment properties. Existing properties are grandfathered. Here's what it means for your portfolio.
- New rules: negative gearing limited to new builds
- Capital gains discount also restricted to new builds
- Existing investment properties are grandfathered
- New-build strategies are now more tax-advantaged
- Structuring portfolios that survive tax reform
- Independent, not tax advice — always confirm with your accountant
What changed in 2026
From 2026, negative gearing and the 50% capital gains discount on residential property are limited to new-build investment properties. That means a newly constructed house, townhouse or apartment that you hold as an investment will generally still allow you to deduct net rental losses against other income, and still benefit from the discounted CGT rate on sale.
Established residential investment properties bought after the change date will no longer qualify for either benefit. Existing properties — those you already own or contract before the change date — are typically grandfathered and continue under the old rules.
These are significant changes. If you are considering an investment property purchase, the new-build vs established distinction is now one of the largest tax drivers in the decision.
What is negative gearing
Negative gearing describes the tax treatment when the costs of holding an investment property (loan interest, depreciation, agent fees, maintenance, insurance) exceed the rental income it produces. Where the rules allow, that net loss can be offset against your other assessable income — typically your salary — reducing your overall tax payable in that year.
It's not a subsidy. It's the ordinary tax treatment of a loss-making investment. Under the 2026 reforms it will continue to apply to new-build residential property, but no longer to established residential property.
How to invest around the new rules
The best defence against tax-policy risk is buying properties that would still be good investments without the tax benefit. That means a focus on yield, sustainable rent, quality tenants and locations with genuine long-term growth drivers — not properties whose only value is a paper deduction.
New-build strategies are now structurally advantaged: they retain both negative gearing and the CGT discount, while also delivering full depreciation, lower maintenance and stronger tenant appeal. House-and-land packages, off-the-plan and fixed-price new builds are all in this category.
This is not tax advice
The information on this page is general and educational. It is not personal tax, financial or legal advice. Australian tax law changes; the position at the date you read this may differ from the date this was written. Please confirm the start date, grandfathering rules and your specific position with a qualified accountant or tax professional before making decisions.
Frequently asked questions
What is negative gearing?
Negative gearing is when the costs of owning an investment property (interest, depreciation, expenses) exceed the rental income. Where the rules allow, the loss can be offset against your other taxable income, reducing your overall tax bill.
Have negative gearing and capital gains rules changed?
Yes. From 2026, negative gearing and the 50% capital gains discount are restricted to new-build residential investment properties. Existing investment properties bought before the change date retain the current rules (grandfathering). Always confirm the start date and your specific position with your accountant or tax adviser.
How do the 2026 changes affect my existing investment properties?
Existing properties are typically grandfathered, meaning the old negative gearing and capital gains rules continue to apply for assets you already own or contract before the legislated change date. The new rules generally affect future purchases after that date.
Should I buy a new build to keep the tax benefits?
New builds will continue to qualify for both negative gearing and the capital gains discount under the 2026 changes. That's one reason we focus on new-build, house-and-land and off-the-plan strategies for investors who want tax efficiency. But the underlying fundamentals still matter more than the tax setting.
What's the alternative to negative gearing?
A property with strong yield (positive or neutrally geared) doesn't rely on tax deductions to work. Rentvestor and commercial SMSF strategies also change how tax deductions interact with your overall position. We build strategies that aren't dependent on any single tax setting.
Build a new-build strategy under the 2026 rules
Book a free 30-minute strategy call. We'll walk through your goals, borrowing capacity and how the new negative gearing and CGT rules affect your next purchase.