A Landlord's Complete Guide to the 2027 Negative Gearing Changes

If you owned an investment property at 7:30pm AEST on 12 May 2026, almost nothing changes for you. That is the single most important sentence in this article. The 2026-27 Budget's negative-gearing reform is built around generous grandfathering, and the panic that followed the announcement has not matched the reality of the rules. This guide walks existing landlords through what the reform actually does, who is affected, and what if anything you should do before 1 July 2027.

The three buckets every landlord falls into

The legislation creates a clean three-way split, defined by the timing of your acquisition:

1. Owned at 7:30pm AEST 12 May 2026 (including contracts signed but not settled): fully grandfathered. Negative gearing against wage income continues forever for that property.
2. Acquired between 12 May 2026 and 30 June 2027: can negatively gear against wage income until 30 June 2027 only. From 1 July 2027, losses convert to carry-forward losses.
3. Acquired on or after 1 July 2027 (and not a new build): no negative gearing against wage income. Losses are carry-forward only, deductible against future residential property income (including capital gains).

If you already own (grandfathered forever)

You can claim losses against your salary in the 2026-27 year, the 2027-28 year and every year thereafter for as long as you hold that property. The grandfathering attaches to the property and the owner, not to a time-limited window. Even renovations, refinancing and changes of property manager do not break grandfathering. Selling and rebuying a different property does the new property is then assessed under whichever bucket applies on its contract date.

Contracts entered but not yet settled at 7:30pm AEST on 12 May 2026 are treated as owned. That language matters: off-the-plan apartments where contracts were exchanged before the deadline but where settlement occurs in late 2026 or 2027 are grandfathered.

If you buy between announcement and 30 June 2027

This is the "transitional" bucket. You can claim full negative gearing against your salary for the 2026-27 financial year. On 1 July 2027, the rules flip. Your subsequent losses become carry-forward losses, deductible only against future residential property income including the eventual capital gain when you sell.

Importantly, the 2026-27 loss is not retroactively converted. Investors who settle now and run negative gearing through to 30 June 2027 keep that tax benefit. There is no clawback.

If you buy on or after 1 July 2027

For established residential property acquired on or after 1 July 2027, losses cannot offset wage income at all. They accumulate as carry-forward losses that wait until you have residential property income to deduct them against. The clock keeps running indefinitely unused losses are not extinguished.

For new builds, nothing changes. Full negative gearing is preserved. See our detailed analysis of off-the-plan apartments after 2027 and knock-down rebuilds.

The Yoonseo example $186 over ten years

Treasury's own factsheet walked through Yoonseo, who buys a $519,000 established property after the announcement (so falls in bucket 3 once 1 July 2027 arrives). Over ten years, Yoonseo accumulates $22,879 in carry-forward losses that she cannot use until she has residential property income or sells the property. When she does sell, those losses offset the capital gain.

The total tax Yoonseo pays across the decade including the deferral cost of not being able to deduct losses immediately is just $186 more than she would have paid under the old rules. The headline-grabbing reform has, in this scenario, a marginal real- world impact because the losses are deferred, not lost.

What to do if you have a large negatively geared portfolio

For landlords with three, five or ten existing properties, the reform is essentially a non- event for the current portfolio. The conversations worth having with your accountant are about future acquisitions:

• Pivoting future acquisitions toward new builds (off-the-plan, house-and-land, duplex KDR)
• Considering positive-cash-flow strategies where carry-forward issues do not arise
• Reviewing ownership structures SMSFs and widely held trusts are excluded from the reform
• Mapping your cash-flow profile against the projected end of grandfathering for any property you might sell and rebuy

For most existing landlords, the right action is no action. Selling a grandfathered property to "lock in" a position you already have is exactly the wrong move you would lose grandfathering on any replacement, trigger CGT on the sale, and re-incur transaction costs.