What is negative gearing?
You buy a rental that costs more to hold than it earns, and use that loss to cut the tax on your wages.
For an established home bought after 7.30pm on 12 May 2026, the loss stops reducing wage tax from 1 July 2027.
The rule
- Under the Tax Reform No. 1 Act 2026, from 2027-28 excess costs on a caught rental are not deductible that year. They can reduce a capital gain, and the rest carries forward.
- A dwelling last acquired before 7.30pm Canberra time on 12 May 2026 is outside the rule. The contract date counts.
- A new residential dwelling is outside the rule, as are uses the Minister determines, such as social or affordable housing. What counts as a new build is not final: the meaning is in a Bill that has not passed (see the proposed rule below).
- Bought between 12 May 2026 and 30 June 2027: geared until then, not after.
- The rule applies to residential property. Treasury says other assets, such as shares, stay under existing arrangements.
- The final definition of a new build, including a 24 month occupancy test, is in the Tax Reform No. 3 Bill, introduced on 14 October 2026.
- Keeping gearing when a home passes from a spouse who dies, or after a relationship ends, is also proposed.
What people ask
How does negative gearing work now?
Today a rental loss can reduce the tax on your wages. For an established home bought after the Budget night on 12 May 2026, that stops from 1 July 2027. Homes bought before Budget night keep the old rule.
Why is negative gearing being grandfathered?
Homes bought before the announcement keep the old treatment, so the change applies only to purchases made after it.
How much is a rental loss worth in tax?
It depends on your income. Treasury's example: a $14,810 loss is worth $4,761 on a salary of $80,000 and $6,961 on $210,000.
How many people negatively gear?
Treasury says about 230,000 people acquired negatively geared properties in 2022-23, around 1% of taxpayers.