What Is Negative Gearing? The Complete 2026 Guide for Australian Property Investors (Updated for the Enacted Reform)

Updated 5 October 2026. Legislation last checked 5 October 2026 against the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the ATO's reform guidance pages and Treasury's August 2026 consultation papers. This article is general information about Australian tax concepts, not personal tax, financial or credit advice. Confirm your position with a registered tax agent before acting.

"Should I negatively gear my investment property?" is still the question we hear most often from Australian investors. Since we first published this guide in December 2025, the law has changed. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed both houses of Parliament on 25 June 2026 and received Royal Assent on 26 June 2026. From 1 July 2027, net rental losses on established dwellings acquired after Budget night (7:30pm AEST, 12 May 2026) can no longer be deducted against salary or other income. Everything acquired before that moment is grandfathered without limit. Eligible new dwellings are carved out.

This guide covers the mechanics, which have not changed; the deductions you can claim, which have not changed either; and the enacted reform, which changes who gets the annual salary offset and from when. Worked examples use the 2026-27 resident tax rates in our negative gearing calculator. Where the ATO has not yet published guidance, we say so rather than guess.

Negative gearing in 2026: the key facts

Source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026), Schedules 1 and 2; ATO "Tax reform: boosting home ownership" guidance. Our summary.

What is negative gearing? (The fundamentals)

"Gearing" means borrowing to invest. A geared property is one bought with debt, and the sign in front of the word describes the cash flow. Negatively geared: the property runs at a loss after deductible expenses. Positively geared: it runs at a profit. Neutrally geared: it roughly breaks even.

The tax treatment follows from a general principle rather than a special property concession. Rent is assessable income, and under the general deduction rules the costs of earning it (loan interest, rates, insurance, agent fees, repairs) are deductible. Australia is unusual among comparable countries in what happens when the deductions exceed the income. The net rental loss reduces your total taxable income, and therefore the tax on your wages, in the same way a loss on a debt-funded share portfolio has historically been treated.

ATO Taxation Statistics for 2023-24 count 2,335,540 individuals with an interest in a rental property, and 1,266,454 of them (54.2%) reported an overall net rental loss, up from 49.4% a year earlier. Individuals who reported a net rental loss averaged $12,019 (a separate ATO table that counts tax-return labels rather than property interests). The Reserve Bank's May 2026 Bulletin puts the median investor's age at 51. That is the population whose treatment the 2026 reform divides in two: those who acquired before Budget night, and those who acquire established dwellings after it.

Negative gearing never made money on its own. An $18,000 rental loss saves at most $8,460 in tax (47% of the loss at the top marginal rate including the Medicare levy), leaving you $9,540 worse off in cash. The strategy only pays if capital growth over your holding period exceeds the cumulative after-tax losses plus the costs of buying and selling. That was true before the reform and remains true after it. The reform decides whether the loss can still reduce your salary income.

How does negative gearing work? The formula, step by step

The mechanics are simple enough to do on one page, and worth doing on one page before any purchase.

Steps one to three: the rental result. Weekly rent multiplied by 52, less every deductible expense, gives your net rental result. Interest is usually the largest expense by a wide margin, followed by running costs (rates, insurance, management, repairs, strata, land tax) and the non-cash items: the Division 43 capital works deduction and Division 40 depreciation. If the result is negative, that figure is your net rental loss for the year.

Step four: apply the loss against other income. For a grandfathered property, or an eligible new dwelling, the net rental loss reduces your taxable income from all sources. On a $90,000 salary and a $20,080 loss, taxable income becomes $69,920.

Step five: the tax effect. The saving is the loss multiplied by the marginal rate that would otherwise have applied to those dollars. For the 2026-27 year that is 30% plus the 2% Medicare levy for taxable income between $45,001 and $135,000, so 32% of $20,080 is $6,426.

Step six: separate cash from tax. Capital works and depreciation deductions reduce your taxable loss without costing you a cent, so your cash shortfall is the taxable loss minus those non-cash amounts. That is why a property can show a large tax loss and a manageable cash position at once.

Assumptions: $700,000 purchase, 80% LVR, an assumed post-hike interest-only investor rate of 6.75% (the RBA's July 2026 average new investor interest-only rate of 6.5%, Table F6, plus the 25 basis point rise of 29 September 2026, with full pass-through), 2026-27 resident tax rates, taxable income stays within the 30% bracket after the deduction, no vacancy. Figures rounded to the nearest dollar.

What changed: the enacted 2026 reform

The Budget handed down on 12 May 2026 announced the reform; the Act made it law six weeks later. It bundles three connected property measures with different start dates.

Measure one: negative gearing quarantining (Schedule 2), from 1 July 2027. A net rental loss from an established residential dwelling whose ownership interest was last acquired after 7:30pm AEST on 12 May 2026 stops being deductible against wages, business or investment income. The acquisition test generally follows the date the contract is entered into, not settlement, so a contract exchanged in June 2026 that settles in October 2026 is on the new-regime side of the line. The regime applies to individuals, companies and most trusts. The statutory entity carve-outs in s 26-155(4) are widely held unit trusts and complying superannuation entities, which is why SMSFs are exempt. Net rental losses on new residential dwellings, and on activities determined by the Minister (such as social or affordable housing), are also excluded from quarantining, which is the supply incentive at the centre of the Government's design.

Measure two: the CGT method (Schedule 1), from 1 July 2027. For resident individuals, trusts and relevant partnership interests, the 50% CGT discount is replaced by CPI indexation of the cost base with a Division 119 minimum tax of 30% on post-2027 gains. A deemed disposal at market value just before 1 July 2027 (s 112-155) preserves the 50% discount on gains accrued to that date, with the tax deferred until the actual sale (s 112-160). The interaction with negative gearing has its own section below.

Measure three: the SMSF borrowing ban. A Labor-Greens amendment to the same Act (Schedule 5) means a fund can no longer enter a new limited recourse borrowing arrangement over real property unless it is business real property, which rules out residential purchases. It commenced on 10 August 2026. Arrangements entered before then are grandfathered, including maintaining or refinancing them, as are acquisitions contracted before commencement that settle later. Our LRBA ban checklist covers the detail.

For planning, nothing about negative gearing changes in 2026-27: every investor, on both sides of the cut-off, deducts rental losses under the current rules until 30 June 2027. And the negative gearing cut-off and the CGT change have different triggers. The 12 May 2026 line governs gearing only. The CGT method change applies to individual- and trust-held assets broadly, with the deemed disposal doing the protective work regardless of when you bought.

The main rules are in the Act, but some administration is still outstanding. As at 5 October 2026 these items remain pending, and we do not predict them:

Source: Treasury consultation hub (c2026-792170) and ministerial media releases, August to September 2026; ATO new-legislation pages. Status as at 5 October 2026.

Who is grandfathered and what quarantining means

Walk your portfolio through the test one property at a time.

Contract entered into before 7:30pm AEST, 12 May 2026 (any residential property). Fully grandfathered. Net rental losses stay deductible against salary and other income for as long as you hold the property. The enacted Act sets no time limit, no phase-out and no per-taxpayer cap on grandfathered dwellings. A straightforward refinance does not change a property's status, because grandfathering attaches to the ownership interest in the dwelling rather than the loan. Transfers of ownership (into a trust, between spouses, a change in partial interests) are different events and can end grandfathering; review them with your adviser before acting.

Acquired after the cut-off: eligible new residential dwelling. Outside the quarantining rules, subject to the definition, which is still pending (see the table above). Treasury's August 2026 consultation draft covers several cases, including a purchase within 24 months of the occupancy certificate. Until a definition is law, do not assume an edge case (substantial renovation, off-the-plan resale, knock-down rebuild) qualifies.

Acquired after the cut-off: established dwelling. Caught. Full deductibility against salary continues only until 30 June 2027. From 1 July 2027 the net rental loss is quarantined.

Held through a company or trust. Inside the quarantining regime. The new s 26-155 applies to any entity, and its only entity carve-outs (s 26-155(4)) are widely held unit trusts and complying superannuation entities. Companies sit outside the new CGT method only because they never had the 50% discount.

Held through a complying superannuation fund. Exempt from quarantining, and the fund keeps its one-third CGT discount. The same Act removed the fund's ability to borrow for new purchases of any real property other than business real property.

Deceased estates and relationship breakdowns. Treasury's Tax Reform No. 3 exposure draft proposes preservation rules for these transfers, but it is not law, so do not build a plan around the detail.

What "quarantined" means, precisely

Under the Act's method statement, a quarantined net rental loss can be applied against three things: assessable income from your quarantined dwellings, net rental income from your non-quarantined dwellings (including grandfathered properties), and revenue or capital gains on residential dwellings. Whatever is unused carries forward to later years without expiry, with one exception: carried-forward amounts are extinguished on bankruptcy. What the loss can no longer touch, from 1 July 2027, is your salary, business income or non-property investment income.

Every deduction remains a deduction inside the property calculation, so a depreciation schedule keeps its value. Portfolio investors keep more of negative gearing's value than single-property investors, because a quarantined loss from one dwelling can absorb the taxable rental profit from another. And the value arrives later rather than each year: against future residential rental profit if there is any, otherwise against residential capital gains at sale. That turns an annual cash-flow subsidy into a deferred tax asset.

Source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Schedule 2; ATO reform guidance. Definition of new residential dwelling still pending as at 5 October 2026.

Worked examples: how much tax do you save in 2026-27 (and after 1 July 2027)?

All figures below use the 2026-27 resident tax rates and thresholds built into our negative gearing calculator, plus the 2% Medicare levy. Interest is modelled at 6.75% interest-only, an assumed post-hike investor rate (see the formula table note); substitute your own. Rent, running costs and capital works figures are illustrative and rounded.

Source: ATO, Tax rates, Australian residents, 2026-27 (the same rates our negative gearing calculator uses); Medicare levy applied at the full 2% (low-income levy reductions ignored). The first marginal rate falls from 15% to 14% from 1 July 2027.

Example 1: grandfathered purchase, $90,000 salary (30% bracket)

Contract exchanged in 2024, so the property is fully grandfathered and the salary offset continues indefinitely. This is the base case from the formula section: a $700,000 house, $560,000 loan, $560 a week in rent.

Assumptions: as per the formula table; taxable income remains inside the 30% bracket after the deduction; no vacancy; interest-only loan.

Example 2: grandfathered purchase, $230,000 salary (45% bracket)

A Sydney unit bought in 2022 for $1,100,000 with an $880,000 loan, renting at $800 a week. The salary is set at $230,000 so the whole deduction sits in the top bracket; at $200,000 the loss would straddle the $190,000 threshold and part of it would save 39 cents rather than 47.

Assumptions: 80% LVR, 6.75% interest-only (assumed post-hike rate), 2026-27 rates, taxable income remains above $190,000 after the deduction, no vacancy. Illustrative.

Nearly half of this investor's loss comes back through the tax system, which is why quarantining costs high-income investors most per dollar of loss when it applies to them.

Example 3: established dwelling bought after 12 May 2026, $90,000 salary (quarantined from 1 July 2027)

Same property, same investor as Example 1, but the contract is exchanged in October 2026. The loss is quarantined from 1 July 2027. The property's numbers are the same; only where the loss can be used changes. The first column shows a full-year equivalent; a buyer who settles part-way through 2026-27 claims a pro-rata share.

Assumptions: as per Example 1; the investor has no other residential property income in FY2027-28, so the whole loss carries forward. If the investor also owned a grandfathered property returning a taxable rental profit, the quarantined loss would first offset that profit.

The $124 a week is what the reform means in practice for this buyer. The $20,080 remains available to offset future rental profit on this or another residential property, and whatever remains reduces the capital gain when residential property is sold. The annual salary offset, though, stops after the first year.

Example 4: eligible new dwelling bought after 12 May 2026

If the same $90,000 investor instead contracts on an eligible new residential dwelling after the cut-off, the Example 1 arithmetic continues indefinitely, and the loss would typically be larger because plant-and-equipment depreciation is available in full. The condition is that the dwelling meets the definition of a new residential dwelling once it is settled. The trade-off is usually a developer premium, which we quantify in our new-build versus established carve-out modelling.

The same loss across brackets

Assumptions: grandfathered or new-dwelling property; the full loss is deducted within the stated bracket; 2% Medicare levy included; the "after-tax cost" here is measured against the taxable loss, not the cash shortfall. For a post-cut-off established dwelling from 1 July 2027, every row's tax saved in the year is $0 unless the investor has residential property income to absorb it.

What expenses can you claim? (The complete list)

The ATO allows deductions for expenses incurred in earning rental income while the property is rented or genuinely available for rent. Quarantining leaves this list unchanged, so it applies to every investor, grandfathered or not.

Fully deductible in the year incurred

• Loan interest. The interest component of repayments on the loan used to buy the property (and on borrowings for deductible repairs or costs). Principal is not deductible. Typically the largest deduction by far: $560,000 at 6.75% is $37,800 a year.
• Property management fees and letting fees. Usually 5% to 9% of rent plus a letting fee per new tenancy.
• Council rates, water and sewerage charges.
• Land tax, where the property is above your state's threshold. Our land tax guide has the 2026-27 thresholds.
• Insurance. Landlord, building and contents cover.
• Repairs and maintenance. Fixing or maintaining existing items: plumbing, repainting, replacing a broken hot water system with an equivalent. Improvements are not repairs (see below).
• Strata levies (administrative and sinking fund contributions, but not special levies for capital works, which are treated as capital).
• Advertising for tenants, pest control, gardening, smoke-alarm servicing, safety inspections.
• Accounting and tax agent fees for preparing the rental schedule.
• Costs during vacant periods between tenants, provided the property is actively marketed for rent at a realistic price.
• Borrowing costs over $100 (loan establishment fees, lender's mortgage insurance, valuation fees, mortgage registration) are deductible over five years or the loan term if shorter, not in one year.

Deductible over time (non-cash)

• Capital works (Division 43). Generally 2.5% a year of eligible construction cost for residential buildings where construction started after 15 September 1987, for 40 years from completion. Structural improvements and renovations by you or a prior owner are also claimable at 2.5% from when they were completed. A quantity surveyor's schedule identifies the eligible cost.
• Plant and equipment (Division 40). Carpets, blinds, appliances, air-conditioning units and similar items depreciate over their effective lives. One limit matters for established purchases: for second-hand residential property acquired after 7:30pm on 9 May 2017, depreciation on previously used plant and equipment is generally not available to individual investors. You can still depreciate new items you install. New dwellings are unaffected, which is part of why their tax profile is stronger. Our depreciation guide covers Division 40 versus Division 43 in detail.

Not deductible

• Principal repayments. Only the interest component counts.
• Capital improvements. A new kitchen, an extension, a second bathroom. These add to the property's cost base for CGT (and structural elements may qualify for the 2.5% capital works deduction), but they are not deductible outright.
• Acquisition costs. Stamp duty, conveyancing, building and pest inspections. These form part of the cost base.
• Travel to inspect or maintain the property. Not deductible since 1 July 2017, unless you carry on a business of letting property or are an excluded entity.
• Expenses for periods the property is not rented or genuinely available for rent, including private use.

Record keeping is unchanged: five years from lodgment for expenses, and the life of the asset plus five years for purchase and improvement records, because they set your CGT cost base.

When does negative gearing actually work?

Negative gearing costs a known amount of after-tax cash each year in return for uncertain capital growth. The cost is the after-tax cash you contribute each year. The payoff is capital growth, taxed on exit. Whether the bet is sound depends on six conditions, and the reform adds a seventh for post-cut-off established purchases.

Conditions under which negative gearing has historically worked

1. A higher marginal rate. At 39% or 47% the tax system returns a substantial share of each dollar lost; at 17% or 32% you carry most of it yourself.
2. A property in a market with a defensible growth case: constrained supply, diversified employment, infrastructure with funding attached, low vacancy. Growth assumptions need data behind them.
3. Stable, secure income to fund the weekly shortfall for years, including through rate rises.
4. A cash buffer covering at least twelve months of shortfall plus a major repair.
5. A long horizon, typically seven to ten years or more, so that growth has time to outrun transaction costs.
6. Rent growth potential, because most negatively geared properties drift toward neutral over time as rents rise against a flat or falling interest bill.

Conditions under which it fails

• Low marginal rate, so the subsidy is thin and the cash drain is real.
• Flat or falling values for an extended period. Losing $11,154 a year for a decade on a property that does not grow is a $112,000 mistake before transaction costs.
• Variable or insecure income, no buffer, or a short horizon; any of the three can force a sale at the worst time.
• A need for income now. Retirees are funding losses from savings, the opposite of their goal.
• New for post-cut-off established purchases: a cash flow that only works with the salary offset, which ends for these properties on 30 June 2027.

The break-even arithmetic

Using Example 1's after-tax cash cost of $11,154 a year, a ten-year hold accumulates $111,540 in after-tax contributions. Add an illustrative $50,000 for stamp duty, selling costs and legal fees across the round trip, and the property must grow by about $162,000, or 23% in total, just to return your money. On a $700,000 purchase that is roughly 2.1% a year compound before any real profit.

Assumptions: Example 1 figures held flat for ten years (in practice rents rise and the loss usually shrinks); $50,000 round-trip transaction costs (illustrative); growth rates are illustrative scenarios, not forecasts; CGT on exit excluded. Results computed before rounding to the nearest $1,000.

Read this table against current conditions. Cotality's Home Value Index for September 2026 has national dwelling values 5.2% below their March 2026 peak after a sixth consecutive monthly fall, and CommBank Economics' 1 September revision forecasts further falls into the first half of 2027. Growth assumptions in a break-even model should be defended against that backdrop, not against 2021 to 2024. Then there is the exit tax. Growth after 30 June 2027 is taxed on the CPI-indexed real gain with a 30% minimum for individuals and trusts, which is cheaper than the discount when growth is slow and inflation-heavy and dearer when growth is fast. Neither changes the break-even growth rate above, though both affect the after-tax result on a sale.

For an established property bought after 12 May 2026 the bar is higher. On Example 3's figures the owner gets the tax saving in 2026-27 only, so ten years of after-tax costs total about $169,000; with the same $50,000 of transaction costs the property must grow about $219,000, or roughly 2.8% a year compound, before counting any recovery of the carried-forward losses at sale.

Negative gearing for buyers after 12 May 2026

Every buyer since Budget night is already on the new-regime side of the line, so the decision is live now.

Buying new. Eligible new dwellings keep the salary offset, keep full plant-and-equipment depreciation, and under ss 115-100(a) and 115-102 keep a 50% CGT discount on later growth (with an indexation option). Together those make the tax profile of a qualifying new build materially stronger than an established equivalent from 1 July 2027. Against that sit the familiar costs of new stock: a developer margin in the price, weaker resale liquidity in the first years, and concentration risk where many similar dwellings complete at once. The open question is the definition. Until it is law, "new" is not a category you can rely on for an edge case. Our carve-out modelling puts numbers on how large a premium the tax advantages can absorb.

Buying established. The purchase has to stand on its own cash flow, which means three changes to how you run the numbers. Model the salary offset for the months to 30 June 2027 only, as a one-off rather than a feature of the asset. Model FY2027-28 onward on the full pre-tax shortfall, as in Example 3. And work out the rent at which the property turns cash-neutral before tax (on Example 1's costs, about $900 a week against $560 today, absent a lower interest bill or purchase price) and decide whether that is reachable inside your horizon. A quarantined loss is not wasted, but its value arrives later (against future residential rental profit, otherwise against residential capital gains at sale), so an established purchase that relies on the annual salary offset will cost more than the buyer modelled.

Why yield now matters more than it did. For post-cut-off established stock, the effective test has shifted from "can I afford the after-tax shortfall" to "can I afford the pre-tax shortfall". That pushes buyers toward higher-yield property and away from deeply negative trophy assets in the same way a rate rise would. Our positive cash flow property guide sets out the yield you need at current rates and where it is found, and our analysis of rental yield expansion in a falling market explains why the yield gap between segments has widened through 2026.

Investor lending is down. Investor loan commitments fell 8.6% by number and 10.2% by value in the June quarter. A thinner field of competing buyers is a real advantage for a cash-flow-first purchaser negotiating on established stock, and a negotiated discount can outweigh the lost salary offset if the property is positively gearable within a few years. It does not justify buying a property that only works with a salary offset that ends on 30 June 2027.

Structure. A company does not escape quarantining; a complying super fund does, but can no longer borrow for a residential purchase, so that route now suits cash-rich funds only. Trusts are inside both changes. Our post-Budget 2026 investment strategies guide works through the options structure by structure.

Negative vs positive gearing: which strategy suits you?

Source: our analysis. Yield bands are indicative of current market segments, not forecasts.

From 1 July 2027 the trade-off applies differently to established purchases. For an established purchase today, a high-income investor carries the whole shortfall from 1 July 2027, which is the position a low-bracket investor has always been in. Our view is that post-cut-off established purchases should therefore be assessed on pre-tax cash flow, as if the buyer were in the lowest bracket.

How the CGT changes interact with negative gearing

Keep the two measures apart: your contract date decides your gearing treatment, but not your CGT treatment.

What happens on 1 July 2027 for CGT. Under s 112-155, an Australian-resident individual holding a post-1985 CGT asset on 30 June 2027 is treated as having sold it just before 1 July 2027 for market value and reacquired it for the same amount. Nothing is payable that day. When you eventually sell, you bring to account a deferred gain (30 June 2027 value less your cost base) taxed as a discount capital gain under today's rules, and a post-2027 gain (proceeds less the 30 June 2027 value, indexed for CPI from 1 July 2027) subject to the Division 119 30% minimum tax. Trusts are covered by ss 112-165 and 112-170. Complying super funds keep the one-third discount and are excluded, and eligible new dwellings and affordable housing sit outside the deemed disposal under their own provisions.

Where quarantined losses re-enter. A quarantined net rental loss not absorbed by residential rental income is applied against residential capital gains at sale. That is how a post-cut-off established property eventually recovers its deferred deductions. The value depends on ordering rules against the deferred and post-2027 components, which is why Example 3 puts no dollar figure on the recovery; the reliable point is that the benefit arrives later, not as an annual salary offset.

The action item. Every individual and trust investor now has a valuation date on 30 June 2027. The ATO has not published its evidentiary standard, and Treasury's alternative apportioning method is still an exposure draft. Collect evidence around June 2027 (comparable sales, agent appraisals, the current lease, condition photographs) and obtain a retrospective valuation as at 30 June 2027 shortly after. Our guide to the 1 July 2027 CGT changes has the detail and a records checklist; our capital gains tax guide covers the general mechanics.

Where the debate stands: positions and our analysis

The Government's position. The Treasurer's framing at the Budget and through passage was that quarantining plus the new-dwelling carve-out redirects investor tax incentives toward housing that adds to supply, while unlimited grandfathering protects existing investors from retrospective change. The CGT method change was presented as a return to taxing real rather than nominal gains, a system Australia used from 1985 until the 1999 Ralph Review.

The Greens. Supported the Act with amendments, including the SMSF borrowing ban, which is now in force.

The Opposition. The Coalition voted against the Bill and has pledged to repeal it. In his Budget reply in May 2026, Opposition Leader Angus Taylor said a Coalition government he leads would repeal Labor's negative gearing and capital gains tax changes (ABC News, 15 May 2026), and Shadow Treasurer Tim Wilson restated the position after passage ("We will repeal them", Sky News). The next federal election is due by 2028, after the 1 July 2027 commencement, so any repeal would arrive with the new regime already operating. Australia's previous quarantining regime, introduced in July 1985, was repealed in September 1987 with effect from 1 July 1987, so the pledge is worth monitoring.

Industry and housing bodies. The Housing Industry Association's modelling, which we analysed in March, argued that a new-dwelling carve-out would not fully replace lost investment in established rental stock and would tighten the rental market. The June quarter 2026 fall in investor lending (ABS Lending Indicators) is consistent with the demand-side half of that argument; whether the new-dwelling share of investor lending rises through 2027 will test the supply-side half.

Our analysis. For an individual investor, the enacted law rather than the policy debate is now the basis for planning. The reform favours portfolio investors over single-property investors (quarantined losses find income to offset), long holds over short ones (indexation), higher-yield stock over deeply geared trophies (pre-tax cash flow), and grandfathered assets over everything else (they cannot be replaced once sold). What would change our view is a credible repeal or amendment commitment from a party positioned to legislate it before 1 July 2027; the 1985 to 1987 precedent is why we do not treat that possibility as zero.

Frequently asked questions

The bottom line

• Negative gearing is split, not abolished. Grandfathered owners and eligible new-build buyers keep the salary offset. Anyone who has bought an established dwelling since Budget night loses it from 1 July 2027, and the property has to work on pre-tax cash flow from then on.
• The arithmetic is unchanged. Negative gearing only pays when growth outruns cumulative after-tax losses and transaction costs, and it has always favoured higher marginal rates and secure income. On our Example 1 figures that takes about 2.1% a year compound growth over ten years.
• 2026-27 is the planning window. It is the last income year the old negative gearing and CGT rules apply to everyone. Document your contract dates now, and prepare valuation evidence for 30 June 2027.

What to monitor. The definition of "new residential dwelling", by Ministerial instrument or in the Act if Treasury's proposal proceeds, which sets the boundary of the carve-out. The ATO's valuation-evidence guidance for the 30 June 2027 deemed disposal, and whether Treasury's apportioning-method determination is registered. The Tax Reform No. 3 Bill on inheritance and relationship-breakdown transfers. Any repeal or amendment commitment from a party positioned to legislate it, because the 1985 to 1987 episode shows a gearing regime can reverse within one holding period. We will update this guide as each lands.