If you own an investment property, or you're thinking about buying one, the rules just shifted under your feet. In the 2026–27 Federal Budget, the Government announced the biggest changes to negative gearing in a generation, and the legislation is now law.

Here's what's actually changing, who it affects, and what it may mean for your portfolio.

The headline change

From 1 July 2027, negative gearing on residential property will be limited to new builds only. If you buy an established (existing) residential property after this date, you'll no longer be able to offset rental losses against your salary or other personal income.

Losses on established properties acquired after the cut-off will instead be quarantined; they can only be offset against rental income or future capital gains from residential property, not your day job earnings.

The date that actually matters

The real trigger date isn't 1 July 2027, it's 7:30pm AEST on 12 May 2026, when the Budget was announced. That's the line in the sand for grandfathering:‍

Property held or under contract before that time is fully exempt. You keep negative gearing under the current rules, no matter when you eventually sell. Established property purchased after that time is now subject to the new rules once they take effect on 1 July 2027. New builds remain exempt indefinitely; investors can still negatively gear new builds and access the CGT discount.

So if you already own investment property, this change largely doesn't touch you. The impact falls on future purchases of established homes.

Capital Gains Tax is changing too

Alongside negative gearing, the 50% CGT discount for individuals, trusts and partnerships is being replaced with cost base indexation plus a 30% minimum tax rate on capital gains. This only applies to gains accruing after 1 July 2027; gains banked before then are unaffected.

Who is exempt?

A few categories sit outside these changes entirely:

• Properties in widely held trusts and superannuation funds
• Build-to-rent developments
• Private investors supporting government housing programs
• Commercial property and other asset classes (shares, etc.) are unaffected altogether

What this means for you

If you're planning to add an established property to your portfolio, timing now matters more than ever, anything settled before 1 July 2027 outside the new-build category will fall under the new, less favourable rules. New builds and build-to-rent become comparatively more attractive as a tax structure, and if you're sitting on existing holdings, there's no need to panic; grandfathering protects what you already have.