Negative Gearing Changes 2027: 35 Questions Answered

Since the 2026-27 Budget announcement on 12 May 2026, our inbox has been full of the same thirty-five questions. We have grouped them into the five sections that matter most to Australian property investors: grandfathering, new builds, carry-forward losses, special cases and structural questions. Answers reflect the Treasury factsheets and the Budget Papers; where the law is not yet finalised, we say so.

Section 1 Grandfathering

Q1. Is my current investment property affected?

If you owned it at 7:30pm AEST on 12 May 2026, no. Grandfathering applies and full negative gearing against wage income continues forever for that property.

Q2. What if I had a contract signed but unsettled on 12 May 2026?

Treated as owned. The contract date not settlement date is the trigger. Off-the-plan contracts exchanged before the cutoff but settling later are grandfathered.

Q3. Does refinancing break grandfathering?

No. Refinancing, increasing borrowings for property purposes, switching lenders or changing loan terms does not affect grandfathering. Ownership is the only test.

Q4. Does adding my spouse to title break grandfathering?

Partial transfers may cause the transferred portion to be reassessed as a fresh acquisition. Specific advice essential before any post-12 May title change.

Q5. If I sell a grandfathered property and buy another, does grandfathering transfer?

No. Grandfathering attaches to the specific property. A replacement is assessed under the rules in force on its contract date.

Q6. What about major renovations?

Renovations do not affect grandfathering. The property continues as a grandfathered investment regardless of structural improvements.

Q7. Does grandfathering survive change of tenant or property manager?

Yes. Operational changes have no effect on grandfathering.

Q8. What if I move into a grandfathered investment property as my main residence?

Moving in pauses the investment treatment the property becomes your main residence and falls under the main residence exemption. Re-rented later, grandfathering for negative gearing should resume (subject to specific advice), though CGT calculations become more complex due to mixed-use periods.

Section 2 New builds

Q9. Do new builds retain full negative gearing?

Yes. New builds acquired at any time including after 1 July 2027 retain full negative gearing against wage income.

Q10. What qualifies as a new build?

Off-the-plan apartments, house-and-land packages, KDR projects that increase dwelling count, vacant land plus construction, and properties first owned by the builder and not occupied for more than 12 months before first sale.

Q11. Are display homes new builds?

Only if occupation by the builder has been less than 12 months. Long-running display homes typically exceed this threshold.

Q12. Is a KDR that replaces one house with one house a new build?

No. The supply test requires a net increase in dwelling count. Same-count rebuilds do not qualify.

Q13. Does adding a granny flat make my property a new build?

No. Granny flats added to existing properties do not satisfy the supply test. See our granny flat analysis.

Q14. What if I buy a new build, then sell it later does new build status transfer?

No. First sale to a non-builder consumes new-build status. The subsequent purchaser is treated as buying established property.

Q15. Are commercial-to-residential conversions new builds?

Generally yes, because the conversion creates new residential dwellings where none existed before. Apportionment may apply for mixed-use buildings.

Section 3 Carry-forward losses

Q16. What happens to my losses if I can't deduct them against wages?

They are added to your personal residential property loss register, deductible against future residential rent surpluses and residential capital gains.

Q17. Do carry-forward losses expire?

No. They remain on the register indefinitely until used or extinguished on death.

Q18. Can carry-forward losses offset capital gains?

Yes but only capital gains on residential investment property. They cannot offset gains on shares, commercial property, or other CGT assets.

Q19. Can spouses share carry-forward registers?

No. The register is personal and non-transferable, even between spouses.

Q20. What happens to my register on death?

Carry-forward losses are extinguished on death. They do not transfer to the estate or beneficiaries.

Q21. Can I use carry-forward losses against rent from my new-build property?

Yes. Rent surpluses on new-build properties form part of residential property income for register-application purposes, even though losses on those properties do not enter the register.

Q22. Does the register apply to joint property holdings?

Each joint owner's share of income and loss flows to their personal register, in proportion to their ownership interest.

Section 4 Special cases

Q23. Are SMSF properties affected?

No. SMSFs are excluded. See our SMSF analysis.

Q24. Are commercial properties affected?

No. The reform applies only to residential. See our commercial property analysis.

Q25. What about Airbnb and short-stay accommodation?

Depends on classification. Genuine commercial short-stay operations may fall outside residential treatment; casual host arrangements typically remain residential.

Q26. Are shares affected?

No. The negative-gearing rules do not change for shares. The general CGT reforms (CPI indexation, 30% minimum) do apply to shares as a separate matter.

Q27. Are family trusts affected?

Discretionary trusts that distribute losses to individual beneficiaries pass the new treatment through. Widely held trusts are excluded.

Q28. What about non-residents?

Non-resident investors are subject to existing non-resident rules and the new regime. The reform applies equally regardless of residency.

Q29. What if I have a holiday home that I rent out part-time?

The portion of expenses attributable to rental periods continues to be deductible. The 2027 reform restricts these deductions to residential property income only (for post-2027 established acquisitions). Personal-use periods are not affected.

Section 5 Structural questions

Q30. Will the reform actually pass?

The Government has announced the reform and provided detailed implementation timelines. Legislation is expected to pass through 2026-27 ahead of the 1 July 2027 commencement.

Q31. Could a future government reverse it?

Possible but politically difficult. Grandfathering protects existing arrangements regardless, so the question primarily affects future acquisitions.

Q32. Should I rush to buy before 1 July 2027?

Only if the investment makes sense independently of tax. Properties acquired between announcement and 30 June 2027 can negatively gear for one year before transitioning to carry-forward modest benefit.

Q33. Will house prices fall as a result?

Treasury modelling suggests ~2% less house price growth over time a slowing, not a fall. Rent impact is estimated at less than $2/week at median.

Q34. How many investors are affected each year?

Approximately 230,000 individuals acquire negatively geared properties annually, roughly 1% of taxfilers. Existing investors are largely shielded by grandfathering.

Q35. Where can I find official information?

Treasury's Budget factsheets, the Budget Papers themselves and the ATO's emerging guidance materials are authoritative. We update this FAQ as new guidance is published.