From 1 July 2027, losses from established residential properties will only be deductible against rental income or capital gains from residential properties. Excess losses will be carried forward and can be offset against residential property income in future years.
These changes will apply to established residential properties acquired from 7:30 PM (AEST) on 12 May 2026. Properties acquired prior to this time — including contracts entered into but not yet settled — will be exempt from the changes until disposal.
Eligible new builds will be exempt from the changes. Properties held in superannuation funds and widely held trusts will also be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing programs.
The table below provides an overview of how the changes will broadly apply from 1 July 2027, based on the Budget announcement.
| Type of asset / owner / acquisition time | Negatively geared from 1 July 2027? |
|---|---|
| A. Established residential properties — held BEFORE Budget night | |
| 1. Contract of purchase signed and settled before 7:30pm AEST on 12 May 2026 | ✓ Yes |
| 2. Contract signed before 7:30pm AEST on 12 May 2026, but settlement occurs after that time | ✓ Yes |
| B. Established residential properties — purchased AFTER Budget night | |
| 3. Purchased between 7:30pm AEST on 12 May 2026 and 30 June 2027 (under the transitional rules, these may be negatively geared up to 30 June 2027 only) | ✗ No |
| 4. Purchased on or after 1 July 2027 | ✗ No |
| C. Newly built properties — purchased at ANY time | |
| 5. Eligible "new build" residential properties (those that genuinely increase supply) | ✓ Yes |
| 6. Properties that are not eligible "new builds" (those that do not increase supply) | ✗ No |
| 7. Subsequent purchasers of "new builds" (second or later buyer) | ✗ No |
| D. Non-residential property & other asset classes — purchased at ANY time | |
| 8. Commercial properties | ✓ Yes |
| 9. Shares and other non-residential property asset classes | ✓ Yes |
| 10. Private investors supporting government housing programs (e.g. affordable housing) | ✓ Yes |
| E. Entities exempt from the negative gearing changes | |
| 11. Widely-held trusts (e.g. most managed investment trusts) | ✓ Yes |
| 12. Superannuation funds (including SMSFs) | ✓ Yes |
Related reading: Reforms on the CGT regime → and our Federal Budget 2026–27 overview →
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