Negative gearing · 1 July 2027 rules
Negative gearing calculator
A rental loss of $14,810 on $80,000 of other income cuts your tax by $4,761.35 in 2027-28. The property was held before the 12 May 2026 announcement, so it is grandfathered.
Tax saved this year
$4,761.35
Grandfathered: loss reduces your salary
| Net rental result | -$14,810.00 |
|---|---|
| Deducted from other income | $14,810.00 |
| Offset against residential income | $0.00 |
| Carried forward | $0.00 |
| Taxable income | $65,190.00 |
| Tax effect of the property | -$4,761.35 |
| Deferred by the 2027 rules | $0.00 |
| After-tax cash flow, per week | -$193.24 |
The same loss, bought before and after the Budget
On the example figures, a $14,810 loss on $80,000 of salary saves $4,761.35 in 2027-28 if the property was held before the announcement. On an identical property bought after 1 July 2027, the saving this year is $0.00. The $14,810 loss carries forward instead, and is worth $4,761.35 at today's rates once there is residential income to offset it against.
Who the 2027 rules apply to
| Property | 2026-27 | From 1 July 2027 |
|---|---|---|
| Established, held at 7:30pm AEST 12 May 2026 (incl. unsettled contracts) | Negatively geared | Negatively geared until sold |
| Established, bought after announcement, before 1 July 2027 | Negatively geared | Quarantined |
| Established, bought from 1 July 2027 | n/a | Quarantined |
| Eligible new build | Negatively geared | Negatively geared |
| Commercial property, shares | Unchanged | Unchanged |
The limits apply to individuals, partnerships, companies and most trusts. Widely held trusts, such as most managed investment trusts, and super funds (including SMSFs) are excluded. Treasury's own example shows why the value of the deduction depends on income. A $14,810 loss is worth $4,761 to someone earning $80,000 and $6,961 to someone on $210,000. This calculator reproduces both figures.
Common questions
Is negative gearing being abolished?
No. From 1 July 2027, negative gearing on residential property is limited to new builds. A loss on an established property bought from 7:30pm AEST on 12 May 2026 can then only reduce residential property income, including residential capital gains. Any excess carries forward to later years.
I owned my investment property before 12 May 2026. Am I affected?
No. A property held at 7:30pm AEST on 12 May 2026 can still be negatively geared against your salary for as long as you own it. That includes one where contracts were signed but had not yet settled.
I bought after the Budget but before 1 July 2027. What happens?
Losses up to 30 June 2027 can still reduce your other income. From 1 July 2027 the property is treated like any other established property bought after the announcement, and its losses are quarantined.
What counts as a new build?
A dwelling that adds to supply: one built on vacant land, or a knock-down that replaces one dwelling with more than one. A knock-down rebuild that does not add a dwelling, an extension or a granny flat does not count. The dwelling cannot have been sold before, unless the builder owned it and it was occupied for less than 12 months.
Are shares and commercial property affected?
No. The limits apply only to residential property. Losses on commercial property and on other investments such as margin-lent shares are treated as they are now.
Is a quarantined loss lost?
No. It carries forward and reduces residential property income in later years, including the capital gain when you sell. What changes is when you get the tax benefit, not whether you get it.
Not covered here
- Properties held through companies or trusts, where losses stay in the entity.
- Division 293, the Medicare levy surcharge and offsets other than the low income tax offset.
- Exemptions for investors who support government housing programs, which are still to be detailed.
- 2026-27 Medicare levy thresholds, which are provisional until next Budget.
Government sources
- ATO: Tax reform, reforming negative gearing and capital gains tax
- Treasury: Budget 2026-27 tax explainer, Negative Gearing and Capital Gains Tax Reform (PDF)
- Parliament of Australia: Treasury Laws Amendment (Tax Reform No. 1) Act 2026
- ATO: Residential rental properties
Estimate only, not tax advice. Rules checked against the sources above on 23 September 2026. When you sell, see the capital gains tax calculator and the guide to the negative gearing changes.