The Federal Government is shaking up the way property investing works in Australia. From 1 July 2027, negative gearing will be limited to new builds.

So what does that actually mean?

If an investor buys an established or “existing” property after budget night, they won’t be able to use rental losses to reduce the tax they pay on their normal income anymore. 

Instead, those losses will need to be carried forward and used later against future rental profits or capital gains tax when the property is sold.

The good news for current investors? If you already own an investment property before budget night, you’ll be grandfathered under the existing rules.

The headlines are all focused on tax changes, but the real sting could actually be borrowing power for investors. 

At the moment, many lenders factor expected negative gearing tax benefits into servicing. In simple terms, that tax refund can help increase how much you can borrow.

Without that benefit attached to established properties, borrowing capacities could take a serious hit. 

There’s already a lot of debate around what this could do to the property market long term.

One big concern is that investors may now flood the new-build market because that’s where the tax benefits remain. The problem? That’s also where a lot of first home buyers are already competing.

At the same time, discouraging investors from buying established homes could reduce rental supply in many suburbs, which may place even more pressure on rents.

We could also start seeing a split market develop. Investors with strong cash-flow positive properties may not feel much change, while investors relying heavily on negative gearing and borrowing capacity could feel the sting quickly.

Either way, this is one of the biggest changes to Australian property investing we’ve seen in a long time, and it’s likely to change the way both investors and everyday buyers approach the market moving forward.

Our advice would be to reach out to your accountant to see how these changes will affect you in the short and long term.