The 2026 Federal Budget made one of the biggest changes to property investment tax rules in decades. If you own an investment property, or you're planning to buy one, negative gearing in Australia now works differently depending on when you bought and what type of property you hold.

Here's what actually changed, who it affects, and what it means if you're financing an investment property from here.

What changed in the 2026 Budget

From 1 July 2027, negative gearing for established residential properties is being phased out. It applies to any established property purchased after 7:30pm on 12 May 2026, the moment the change was announced.

In plain terms: if you buy an established home as an investment after that date, you'll no longer be able to offset rental losses against your salary or other personal income. Losses can still be offset, but only against rental income or future capital gains from that property.

The change sits alongside a second reform. The 50% capital gains tax discount is being replaced with cost base indexation and a 30% minimum tax rate for affected properties. The two changes are designed to work together, shifting the tax benefit away from established housing.

Who's grandfathered and who's exempt

If you already own an investment property, or you were under contract before 7:30pm on 12 May 2026, you're grandfathered. You keep access to negative gearing under the existing rules, no action needed on your part.

There are also targeted exemptions outside the grandfathering rule:

  • New builds remain exempt. You can still negative gear a new build and access the 50% CGT discount.
  • Properties held in widely held trusts and superannuation funds are exempt.
  • Build-to-rent developments and private investors supporting government housing programs are exempt.

So the change isn't a blanket removal of negative gearing. It's a shift in incentives, away from established homes and toward new housing supply.

New builds vs established property

This is the part worth sitting with if you're still deciding what to buy. Under the new rules, a new build investment property keeps the tax treatment investors are used to. An established property bought after the cut-off doesn't.

That doesn't automatically make a new build the right choice for you. Location, rental demand, build quality and your overall strategy still matter more than the tax outcome alone. But it does mean the numbers on an established property need to be assessed differently than they would have a year ago.

What it means for your borrowing power

This is the change most investors haven't clocked yet. Many lenders factor negative gearing tax savings into how they calculate your borrowing capacity, known as serviceability. If that benefit no longer applies to an established property, some lenders will stop counting it.

For investors buying established homes after the cut-off, this could reduce borrowing capacity by as much as 30%, depending on the lender. Not every lender will treat it the same way, which is exactly where it pays to compare across the panel rather than ask just one bank.

The investors most exposed to this shift are those with higher marginal tax rates, higher leverage, lower rental yields and higher interest costs relative to rent. If that sounds like your situation, it's worth getting your numbers checked before you commit to a purchase.

What to do if you're planning to invest

Whether the 2026 negative gearing changes affect you depends on three things: when you bought (or buy), what type of property it is, and how your individual lender treats serviceability now. There's no single answer that applies to everyone.

Before you sign a contract on an investment property, it's worth getting a clear read on:

  • Whether the property qualifies as a new build or falls under the established property rules
  • How your preferred lender is treating negative gearing in their serviceability calculations
  • What your actual borrowing capacity looks like under the new rules, not the old ones

This is the kind of detail that's easy to miss if you're working it out alone, and expensive to get wrong once you've signed.

Get a clear read on your numbers

We check your situation against the new negative gearing rules and the latest lender policies before we recommend anything. No pressure, no jargon, just a straight answer on where you stand and what you can actually borrow.

Book a free call with Swish and we'll walk you through it.