Negative Gearing Changes 2027: What Property Investors Need to Know

One of the biggest changes to property investment tax in Australia in decades is now law. From 1 July 2027, negative gearing is limited for established homes bought after Budget night 2026, and the 50% capital gains discount is being replaced. If you're buying a Gold Coast investment property, or deciding what to do with one you own, it changes the maths.

This guide explains what changed, who is affected, and why cash flow now matters more than ever. It's general information as at November 2026, not tax or financial advice. Talk to your accountant before you act.

The key dates

• 7:30pm AEST, 12 May 2026 (Budget night): the cut-off. Properties you'd contracted to buy before this time are grandfathered.
• 26 June 2026: the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 received Royal Assent after passing the Senate with amendments.
• 1 July 2027: the negative gearing limit and the new capital gains rules start, from the 2027-28 income year.

What's changing with negative gearing

Until now, if your rental property's costs (interest, rates, management, repairs, depreciation) were more than its rent, you could deduct the loss from your salary and other income. That's negative gearing.

From 1 July 2027, for a residential property bought after the Budget night cut-off:

• A net rental loss can't reduce tax on your salary or other income.
• The loss is carried forward. You can use it against future rental income from residential property, or against the capital gain when you sell.

Here's a simple example. A property bought in July 2028 earns $50,000 in rent and has $65,000 in deductions. You can claim $50,000 of deductions against the rent that year. The remaining $15,000 is carried forward, rather than cutting your tax bill straight away (Landmark Valuations' summary of the Act).

Who is grandfathered

If you signed a contract to buy before 7:30pm AEST on 12 May 2026, that property keeps the existing negative gearing treatment. That includes properties under contract but not yet settled at the time, and there's no cap on how many. Buying a new property later, including selling one and buying another, puts the new purchase under the new rules.

New builds are exempt

Newly built homes keep full negative gearing, to encourage new housing supply. Knock-down rebuilds and renovations that don't add a home generally won't count. The exact definition is set by a ministerial instrument, so check the current definition with your accountant before you rely on it. If you're looking at new or off-the-plan apartments, it's one reason they may look more attractive from 2027.

What's changing with capital gains tax

• The 50% CGT discount is replaced for gains from 1 July 2027. Instead, the cost base is indexed for inflation, so you're taxed on the real gain.
• A 30% minimum tax applies to individuals' capital gains, as a top-up if your normal tax on the gain would be lower. People on listed income-support payments, including the Age Pension, are exempt.
• Gains up to 30 June 2027 keep the old 50% discount. Assets are treated as if sold and bought back at market value on 1 July 2027, so a valuation at that date matters.
• New homes: investors can choose the old 50% discount or the new indexation method.
• Companies and super funds, including SMSFs, keep their existing CGT treatment. Separately, SMSFs can no longer use limited recourse borrowing to buy residential property (Acumentis).

What it means for investors: cash flow comes first

For years, many Australian investors bought for capital growth and let negative gearing soften the holding costs. For an established home bought after 12 May 2026, that safety net is gone from July 2027. A property that runs at a loss now costs you that loss in cash, year after year, until it earns enough rent or you sell.

So the question for any new purchase becomes: does this property pay its own way? Rent, not just growth, decides whether the investment works. That makes the way you rent the property out as important as what you buy.

Rental strategies to compare

• Long-term lease (12 months): the simplest and most predictable option, with the lowest running costs. Rent alone often doesn't cover interest on a highly geared property.
• Mid-term furnished stays (1 to 6 months): hospital staff, contractors, insurance claims and relocating families. Usually higher rent than a lease, fewer turnovers than holiday letting, and stays of three months or more sit outside the short-term accommodation planning rules.
• Short-term holiday letting: the highest gross income on the Gold Coast. AirDNA puts the average Gold Coast house on Airbnb at $95,646 in revenue for the 12 months to September 2026, at $577 a night and 55% occupancy. It also has the highest running costs and needs the right council approval.
• A mix: holiday guests in peak season and mid-term stays in the quiet months, which is how we plan the year for many of the properties we manage.
• New builds: keep negative gearing, but check the building's rules and approvals if you plan to let short-term.
• Hotel-style letting pools: hotels and similar accommodation are treated differently in the new law from ordinary residential dwellings. Whether a particular serviced or letting-pool apartment falls inside or outside the negative gearing limit is a question for your accountant.

Gross income isn't profit. Compare each option after management, cleaning, platform fees, furnishing, insurance, rates and interest. Our Gold Coast suburb guide shows what short stays earn by suburb, from Surfers Paradise and Broadbeach to Burleigh Heads and Palm Beach.

Check the rules before you count on short-stay income

Higher income only helps if you're allowed to earn it. On the Gold Coast, short-term letting can need council approval depending on the zone, and some buildings have letting pools or older schemes with their own restrictions. Read our Gold Coast Airbnb rules guide and whether a body corporate can ban Airbnb before you buy.

Holiday homes: two changes at once

If you own a holiday home you also use yourself, the ATO's 2026 holiday home ruling (TR 2026/1) already limits deductions for homes that aren't mainly used to earn rent. Blocking out school holidays and Christmas for yourself can mean losing deductions for interest, rates and other ownership costs altogether (ATO holiday homes guidance). For a holiday home bought after Budget night, the negative gearing limit then applies on top. Renting it out properly through peak periods matters more than ever. See how we manage holiday homes on the Gold Coast.

What to do now

• Check your dates. Find the contract date for each property you own, to confirm which are grandfathered.
• Talk to your accountant about your own position, the 1 July 2027 valuation and how carried-forward losses would work for you.
• Run the numbers for each strategy, not just a long-term lease. Short and mid-term stays can turn a property from cash-flow negative to positive, but only after all costs.
• Check approvals and building rules before you plan on short-stay income.
• Keep good records. Rent, expenses and days available or blocked will matter for carried-forward losses and the holiday home rules.

See what your property would earn

We manage short and mid-term stays across the Gold Coast for 15% all in, and we'll show you honestly how each strategy compares for your property. Get a free rental appraisal with projected income after every fee, plus a council approval check, or contact us.

General information only, as at November 2026. It is not tax, legal or financial advice, and Hauz is not a tax adviser. Some details, including the new build definition, depend on instruments still being finalised. Speak to a registered tax agent or licensed financial adviser about your situation.