In this guide 5 sections
From 1 July 2027 new builds keep negative gearing, while established homes bought after budget night can only offset rental losses against property income. That changes the after-tax numbers, but price, rent, land and supply still decide how a property performs.
- New builds keep negative gearing before and after 1 July 2027.
- Established homes held before budget night keep it too.
- Established homes bought after budget night: losses only offset property income from 1 July 2027.
- Tax should not outweigh price, rent, land and supply.
What changed on 1 July 2027?
From 1 July 2027 negative gearing for residential property is limited for established homes bought after 7:30pm AEST on 12 May 2026: their rental losses can only offset residential property income, including capital gains, and extra losses carry forward. New builds keep negative gearing, before and after 1 July 2027. Properties held before budget night keep it too.
For capital gains, gains from 1 July 2027 use cost base indexation and a 30% minimum tax on every property, while new build buyers can choose the old 50% discount instead. The definition of a new build is in the Tax Reform No. 3 Bill 2026, introduced on 14 October 2026 and not yet passed.
New build or established: how they compare
| New build | Established home | |
|---|---|---|
| Negative gearing | Available before and after 1 July 2027. | Held before budget night: kept. Bought after: from 1 July 2027, losses only offset residential property income. |
| Capital gains tax | Choose the 50% discount or cost base indexation with a 30% minimum tax. | Gains from 1 July 2027 use cost base indexation and a 30% minimum tax. |
| Depreciation | New fittings can be depreciated, plus capital works deductions on the building. | Previously used fittings generally cannot be depreciated if the property was bought after 7:30pm on 9 May 2017, with some exceptions. Capital works deductions may still apply. |
| Land | Often a smaller share of the price, especially in townhouses and apartments. | Often a larger share of the price, depending on the property. |
| Evidence | Fewer comparable sales in new estates, and more new supply nearby. | More sales history to check the price against. |
| Building risk | Builder, contract and completion risk until handover. | Condition, age and repair costs to check before buying. |
Check which rules apply to you
Check your property in three taps
General information based on Treasury’s published measures. Not tax advice.
Losses are quarantined from 1 July 2027
- Until 30 June 2027, rental losses can still offset your other income.
- From 1 July 2027, losses can only offset residential property income, including capital gains, and excess losses carry forward. They cannot offset wages.
- Gains from 1 July 2027 use cost base indexation with a 30% minimum tax, instead of the 50% discount.
What matters more than the tax?
Tax changes the after-tax numbers, but the property still has to perform. The basics have not changed: the price you pay, rental demand, the land and location, the quality of the build, and how many similar properties are being built nearby. A tax benefit does not make up for paying too much or buying where supply outruns demand.
Where Citadel Developments fits
If a new build suits your plan, our sister brand Citadel Developments sources new house and land packages. Citadel Agency buys established property for investors Australia wide, so we can look at both options with you.
General information only. It does not take your objectives, financial situation or needs into account and is not financial, tax, credit or legal advice. Citadel Agency is a licensed buyers agency (licence 092247L) and does not hold an Australian Financial Services Licence.