From 1 July 2027, the tax treatment of an Australian residential investment property will depend, more than it does today, on whether the dwelling is a new build or an established home, and on when you acquired it. New builds can still be negatively geared against other income, including salary. Many established dwellings bought after Budget night cannot. Investors in eligible new builds can also choose to keep the 50% CGT discount when they sell, instead of moving to cost base indexation and the 30% minimum tax.

That difference only helps you if the property actually meets the legal test for a "new residential dwelling". As at November 2026, that test is not fully locked in. The core negative gearing and CGT rules are already law. The detailed definition of a new build was left to later rules, and a bill that would write a definition into the Act had not received Royal Assent. This guide explains the tax difference that is enacted, and flags the definition that is still proposed.

This is general information only. It is not personal advice or tax advice, and it does not take into account your objectives, financial situation or needs. Do not buy, sell or redevelop a property on the basis of a draft definition. Consider speaking with a registered tax agent before you act.

What is already law?

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, does three things that matter here.

First, from the 2027-28 income year, net rental losses on established residential investment properties acquired from 7.30 pm, by legal time in the Australian Capital Territory, on 12 May 2026 are quarantined. They can be used against income from residential properties, including capital gains, and can be carried forward. They cannot be deducted against salary, wages or other non-property income. Properties acquired before that cut-off are grandfathered for negative gearing. The detail is in the Never Lose Interest guides to the 2027 changes and to grandfathering.

Second, a residential dwelling that is a "new residential dwelling" in relation to you is carved out of that quarantine. Treasury's summary is straightforward: new builds can continue to be negatively geared before and after 1 July 2027.

Third, when you sell, investors who buy new builds can choose either the existing 50% CGT discount or the new inflation-based arrangements and the 30% minimum tax. Established property does not get that choice for gains that accrue from 1 July 2027, unless another CGT exception, such as the affordable housing rule, applies. The ordinary old-versus-new CGT comparison is in the Never Lose Interest CGT guide.

How does the tax treatment compare?

The table below is a high-level comparison for an individual investor, once the 2027 rules are in force. It assumes the dwelling is used as residential accommodation.

Question Established dwelling acquired before the 12 May 2026 cut-off Established dwelling acquired after the cut-off New residential dwelling in relation to you
Can a net rental loss reduce salary from 1 July 2027? Yes, if grandfathering applies No. The loss is quarantined against residential property income and can be carried forward Yes, if the dwelling meets the legal new-build test
Can a net rental loss reduce other rental income or a property capital gain? Yes Yes Yes
Which CGT rules apply to gains from 1 July 2027? Indexation and the 30% minimum tax, with the pre-1 July 2027 gain still eligible for the 50% discount if you were entitled to it The same You can choose the 50% discount or the new indexation and minimum-tax rules
Is the CGT choice available? No, unless another exception applies No, unless another exception applies Yes, if the dwelling is an eligible new residential dwelling

Until 30 June 2027, the current negative gearing rules continue to apply to all of these categories. The split starts in the 2027-28 income year.

A quarantined loss is not worthless. The Act's own example, of Henrietta buying an established dwelling in July 2028, shows unused losses being carried forward and later offset against net rental income when the property is no longer negatively geared. What you lose, on a non-grandfathered established dwelling, is the ability to use that net loss to reduce tax on your wage in the year you incur it.

What counts as a new build? This part is still proposed

This is the main uncertainty.

The enacted law does not set out a complete definition. It says a residential dwelling is a "new residential dwelling" in relation to you if requirements determined by the Minister, by legislative instrument, are met. Those requirements can cover:

  • the kind of dwelling
  • the kind of interest you hold, and the circumstances in which you acquired it, including whether you were the builder or a later purchaser
  • how the dwelling was created, such as whether it was built on vacant land, created through substantial renovations, or built to replace a demolished dwelling
  • whether it has a separate title, equitable title or similar interest that another entity can acquire

Before making the instrument, the Minister must be satisfied that the requirements will assist in genuinely adding to the supply of residential dwellings in Australia. The Minister can also determine other activities or purposes, aimed at social or affordable housing and certain disadvantaged groups, that are carved out of the quarantine even if the dwelling is not a new build.

The Government has said it intends to put the final definition and exemptions into primary legislation. In an August 2026 consultation, the Treasurer said a property will generally be considered "new" where it genuinely adds to housing supply, provided it was acquired within 24 months of a certificate of occupancy being issued. That 24-month window was described as an extension of the 12 months set out in the Budget, to give builders and developers more time to sell stock on hand.

A later bill, the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, was introduced to write a detailed test into the Act. As at mid-November 2026 that bill had passed the House of Representatives and had been the subject of a Senate committee report, but it had not received Royal Assent. Until it becomes law, or until a ministerial instrument is made, the operational test is not fully locked in.

Never Lose Interest will update this guide when the definition is settled.

What has the Government said the test may look like?

The following is the Government's stated direction and the approach described in later bill materials. It is not the final statutory test. Treat it as a guide to the policy, not as a reason to sign a contract.

A dwelling might qualify where it is in Australia, is capable of legal occupation, and fits one of these cases:

  • it is built on land that did not already have a residential dwelling
  • dwellings are added so that there are more dwellings on the land than when you acquired it
  • a non-residential building is converted into one or more dwellings
  • you buy a dwelling, within a proposed 24-month window from the first occupancy certificate, from someone for whom it was already a new residential dwelling

Under that approach, a home that is new in the everyday sense may not stay "new" for a later buyer once any occupancy-certificate window has closed. A knockdown rebuild that replaces one dwelling with one dwelling may not meet a "genuinely adds to supply" test, because the number of dwellings has not increased. Adding a granny flat or a second dwelling may be treated differently from extending an existing house, if the test looks at the number of dwellings.

Those outcomes depend on the final definition, including any anti-avoidance rule. Do not rely on them to structure a purchase or a development.

What should investors think about before they buy?

The useful work is to model the cash flow both ways, and to be honest about which bucket the property will sit in if the final definition is tight.

If you buy an established dwelling after the Budget night cut-off, plan on being unable to deduct a net rental loss against your salary from 1 July 2027. The property can still make sense if the rent, the running costs and the expected capital return work without that tax reduction. It looks worse if the numbers only work because a large interest deduction is reducing tax on your wage.

If you buy a property that you expect to be a new build, check the contract date, the occupancy certificate (when it exists), and whether you are the first buyer or a later purchaser. Leave room for the definition to be narrower than marketing materials suggest. "Brand new", "never lived in" and "just completed" are not legal terms in the Act.

Stamp duty can also differ by state between a new home and an established one, especially for first home buyers. That is a separate, state-based question. See the Never Lose Interest stamp duty explainer.

If you already own an established property that is grandfathered, buying a second established property will not extend that protection to the new purchase. Mixing the two in one year does not make the new loss deductible against salary.

Frequently asked questions

Can I still negatively gear a new apartment after 1 July 2027?

Yes, if the apartment is a new residential dwelling in relation to you under the final legal test. That test was still being completed as at November 2026. An off-the-plan purchase is not automatically in the clear just because the building is new when you settle.

If I buy a new house and sell it two years later, is it still a new build for the next buyer?

Under the Government's stated direction, a later buyer would only be in the new-build category if they acquire the dwelling within a proposed window from the first occupancy certificate, and if it was a new residential dwelling for the vendor. After that window, the dwelling may still be new for the person who built it, but not for a later purchaser. This is proposed, not settled law.

Does a knockdown rebuild count as a new build?

Not necessarily. The Minister must be satisfied that the requirements genuinely add to supply, and the Government's consultation materials have focused on adding dwellings, building on vacant land, or converting non-residential buildings. Replacing one house with one house may not qualify. Wait for the final definition, and get advice before you demolish a grandfathered property in the hope of keeping negative gearing.

I bought an established investment property in July 2026. Can I do anything to make it a new build?

Changing the loan, renovating the kitchen or renting it out for the first time will not turn an established dwelling into a new one. Only the legal definition, once settled, can answer whether a particular development or conversion qualifies. Until then, assume an established purchase after Budget night is an established purchase.

Do companies and SMSFs use the same new-build test?

The quarantine rule does not apply to complying superannuation entities or widely held unit trusts, so those entities do not need the new-build exception in the same way. Companies are covered by the quarantine rule unless an exception applies. CGT treatment also differs by entity. Get advice on the structure you are using.

General information warning

This article is general information only. It is not tax advice, legal advice or personal financial product advice. It does not take into account your objectives, financial situation or needs. The tax difference between new builds and established property from 1 July 2027 is law. The detailed definition of a new residential dwelling was still proposed, and had not been locked into final legislation, when this page was reviewed. Consider seeking advice from a registered tax agent before you make a decision.

Sources

Last reviewed: November 2026.