There are major changes coming to the tax treatment of residential investment property and capital gains. Most of the changes start on 1 July 2027, but some important dates have already passed. If you own an investment property, or you are thinking about buying one, it is worth understanding the new rules now.
Negative gearing is changing
Negative gearing is when the costs of an investment property are greater than its income, creating a loss that can currently reduce your other taxable income.
From 1 July 2027, losses from established residential property bought after 7.30pm AEST on 12 May 2026 will generally no longer be deductible against other income such as wages.
Instead, these losses can generally be deducted against income from residential property, including capital gains, with unused losses able to be carried forward.
There are important exclusions.
Capital gains tax is also changing
Currently, an individual who has held an eligible asset for more than 12 months can generally receive a 50% capital gains tax discount.
From 1 July 2027, the 50% discount will be replaced by cost-base indexation for assets covered by the new rules. Indexation adjusts eligible parts of an asset’s cost base for inflation.
The new CGT rules apply to gains arising after 1 July 2027. Existing gains are protected from the change. There are also specific rules for eligible new residential builds, including a choice between the existing 50% discount and the new arrangements.
Why market value around 30 June 2027 matters
For certain assets held across the changeover, the new law uses a market-value reset. In simple terms, the law can treat the asset as though it was sold and reacquired at market value around the start of the new rules.
This means the market value around 30 June 2027 can become important when calculating the eventual capital gain. Good records of that value may therefore be important years later, when the asset is eventually sold.
What you should do now
- Make a list of your investment properties and other significant CGT assets.
- Check when each asset was acquired.
- Keep contracts, settlement statements and records of improvements.
- Talk to us before buying an established residential investment property.
- Keep good evidence of relevant market values around the 1 July 2027 changeover.
Don’t wait until you sell an asset years from now to start looking for old records.
Our invitation
If you own investment property or other significant assets and want to understand how the changes may affect you, please get in touch with us on (07) 3385 0686.
Sources
- Budget 2026-27 – Tax Reform (budget.gov.au)
- Budget 2026-27 – Negative Gearing and Capital Gains Tax Reform (budget.gov.au)
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (legislation.gov.au)
This article is general information only. It doesn’t take into account your personal circumstances and isn’t financial product advice. Please speak with us before acting on anything here.
