Negative gearing is one of the most talked-about topics in Australian property investing — and it's changing. This guide explains the concepts in general terms and what the proposed 2027 changes could mean. It is general information only, not tax advice: your accountant or a registered tax agent should confirm how anything here applies to you.
What is negative gearing?
Under current Australian tax rules, where the deductible costs of owning an investment property (including loan interest) exceed the rental income, the resulting net rental loss may generally be offset against your other assessable income. Whether and how that benefits you depends entirely on your circumstances — speak to your accountant before relying on any tax outcome.
It's worth remembering the basics: borrowing to invest magnifies both gains and losses, property values and rents can fall, and you remain responsible for your loan regardless of how the investment performs.
What's changing in 2027?
Following the May 2026 Federal Budget, the rules for negative gearing are changing for properties purchased after 1 July 2027, with new builds among the limited categories where negative gearing is expected to continue to apply. These rules are still being finalised, and eligibility depends on your circumstances and the final legislation. Treat the current position as subject to change and confirm it with a registered tax agent before you act.
This is why new builds have moved into focus for many investors — and why it pays to understand the finance side early.
Why new builds are different for depreciation
Separate from negative gearing, new and newly built residential properties can attract depreciation deductions:
- Division 43 (capital works): generally 2.5% of construction cost per year.
- Division 40 (plant & equipment): for eligible new plant and equipment.
Since 9 May 2017, investors generally cannot claim Division 40 depreciation on second-hand (previously used) residential plant and equipment — which is one reason depreciation is so often discussed in the context of new builds. Depreciation is a non-cash deduction, and claiming it reduces the property's cost base, which can increase capital gains tax when you sell.
A registered quantity surveyor prepares an ATO-compliant depreciation schedule — we can't quantify your deductions, but you can get an indicative idea with our new-build depreciation estimator.
Where we fit — the finance side
We arrange the loan: construction finance, house-and-land package finance and off-the-plan lending, structured to suit an investment purchase. See new-build & house-and-land investment finance and our construction loans.
What we don't do is advise on your tax position or whether a particular purchase suits your strategy — that's for your accountant, and (for anything involving super or an SMSF) a licensed financial adviser.
Next steps
- Talk to a registered tax agent about your tax position and the 2027 changes.
- Engage a quantity surveyor for a depreciation schedule on any new build.
- Sort your finance early — start an enquiry and we'll help structure the loan.