Negative Gearing and CGT Changes 2027

In the May 2026 Budget the government announced changes to negative gearing and the capital gains tax (CGT) discount. The bill passed both houses of Parliament on 25 June 2026, so the changes are now law. Most of them start on 1 July 2027, but the cut-off date that decides who keeps negative gearing has already passed. Here's who is affected and how.

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Key dates

Date	What happens
7:30pm AEST, 12 May 2026	Cut-off. Established properties you held (or had exchanged contracts on) by then keep negative gearing until you sell.
10 August 2026	SMSFs can no longer take out new borrowing arrangements (LRBAs) to buy residential property.
30 June 2027	Last day an established property bought after the cut-off can be negatively geared against your salary.
1 July 2027	Negative gearing limits and the new CGT rules start.

Negative gearing: who keeps it

Property	Rental losses can reduce your salary income?
Established home held at the 12 May 2026 cut-off	Yes, until you sell it
Established home bought after the cut-off	Only until 30 June 2027
Established home bought from 1 July 2027	No. Losses carry forward
New build that adds to housing supply	Yes
Later buyer of that new build (second-hand)	No
Shares, commercial property	Not affected

If you can't use a loss against your salary, it isn't lost. It's carried forward and can be used against future residential rental income or capital gains from residential property. Super funds (including SMSFs), widely held trusts and build-to-rent developments are excluded from the negative gearing limits.

What a "new build" means: a new dwelling that adds to the housing stock, such as a home on vacant land or a knock-down that replaces one home with more than one. A knock-down rebuild that replaces one home with one home, or a renovation, doesn't count. Some edge cases are still being clarified, so check before you buy.

What it's worth: an investor earning $120,000 with a $12,000 rental loss saves about $3,840 a year in tax under negative gearing. Without it, that saving is deferred until the property makes a profit or is sold.

The CGT discount is being replaced

For individuals, trusts and partnerships, the 50% CGT discount on assets held more than 12 months is replaced for gains that build up from 1 July 2027. Instead:

the cost base is indexed for inflation, so only the real (above-inflation) gain is taxed, and
that real gain is taxed at your marginal rate, with a minimum rate of 30%. People receiving income support, such as the Age Pension, are exempt from the minimum.

This applies to all CGT assets, including shares and crypto, not just property. Gains made up to 30 June 2027 keep the 50% discount. To split a gain between the two periods you'll use either a valuation at 1 July 2027 or an ATO apportionment method; the ATO hasn't yet published the final approach. Investors in qualifying new builds can choose either the old 50% discount or the new method. Your main residence exemption doesn't change.

Example

Someone with $120,000 of other income buys an established investment property on 1 July 2027 for $700,000 and sells it 10 years later. With inflation of 2.75% a year, the indexed cost base is about $918,156.

Sale price	Gain	Tax: old rules (50% discount)	Tax: new rules (indexation, 30% minimum)
$1,050,000 (4.1% a year)	$350,000	$75,600	$55,317
$1,400,000 (7.2% a year)	$700,000	$157,850	$219,817

Estimates at 2026–27 tax rates, ignoring costs, depreciation and carried-forward losses. Purchase and sale costs would increase the cost base and reduce the gain under both methods.

So when prices grow strongly, well ahead of inflation, the new rules mean more tax; with more moderate growth they can mean less. Try your own numbers in the capital gains tax calculator.

What to do now

Already own investment property? Keep your contract dates and purchase records: they prove the property was held at the cut-off. Consider getting a valuation close to 1 July 2027 once the ATO confirms the method.
Thinking of buying? Model the property without negative gearing. If it only works with a tax refund, it may not work any more. A new build keeps the old treatment but often costs more.
Joint owners: how transfers on death or separation are treated is due to be dealt with in a second round of legislation.
Talk to a registered tax agent or licensed adviser before you act. This guide is general information only.

Frequently asked questions

Is negative gearing being abolished in Australia?

Not completely. From 1 July 2027, rental losses on established homes bought after 7:30pm on 12 May 2026 can't reduce your salary income. Properties held before then keep negative gearing until sold, and new builds that add to supply stay eligible.

When do the negative gearing changes start?

1 July 2027. The cut-off that decides which properties are grandfathered was 7:30pm AEST on 12 May 2026, Budget night.

What replaces the 50% CGT discount?

For gains from 1 July 2027, the cost base is indexed for inflation and the real gain is taxed at your marginal rate, with a minimum of 30%. Gains up to 30 June 2027 keep the 50% discount.

Does the CGT change affect my home?

No. The main residence exemption is unchanged.

Do the changes apply to shares?

The negative gearing limits apply only to residential property. The CGT change applies to all assets held more than 12 months, including shares, for gains from 1 July 2027.

Sources

More guides

Last reviewed October 2026. This guide is general information only. It isn't financial, tax, credit or legal advice and doesn't consider your circumstances. Rules change, so check the official sources below or speak to a licensed professional before you make a decision.

Negative gearing and CGT changes from 1 July 2027

Key points