On 25 June 2026, parliament passed the biggest change to property investment tax since the CGT discount came in back in 1999. If you own investment property already, you’ve probably heard the noise. If you’re about to buy, the noise matters less than the mechanics, so here they are.
Kate has banned this topic at dinner, which tells you how many times I’ve explained it in the last six weeks. Consider this the written version so I can stop.
The dates that matter
Two dates, and they do all the work.
7:30pm, 12 May 2026. Budget night. If you owned an investment property before then, or had one under contract, nothing changes for you. Your negative gearing and your 50% CGT discount are grandfathered. Genuinely, you can stop reading.
1 July 2027. For established properties bought after budget night, this is when the new rules bite.
What changed for established properties
Buy an established house today and two things are different from July next year.
Your rental losses stop offsetting your salary. They don’t disappear. They queue up, quarantined, and can only be used against rental profits down the track or the capital gain when you sell. If the property runs $20,000 a year behind, that used to be worth $7,800 back at a 39% marginal rate. Now it’s worth nothing until the property itself makes money.
The 50% CGT discount is gone. In its place: your cost base gets indexed for inflation, and the gain above that gets taxed at a minimum of 30%. On a decent gain over a decent hold, that’s a bigger tax bill than the old discount in most cases.
What didn’t change: new builds
Buy a qualifying new build and you keep negative gearing exactly as it was, and at sale you choose whichever CGT method taxes less, the old discount or the new indexation. Add stronger depreciation on a new dwelling and the government has, deliberately, made new stock the tax-favoured way to invest.
What counts as new: house and land packages, off the plan, townhouses, developments that add dwellings to a site.
What doesn’t: renovated houses, one-for-one knockdown rebuilds, and granny flats on an established block. That last one comes up a lot with our clients. A granny flat can still add hundreds a week in rent, but it won’t buy back your negative gearing, so it lives or dies on rent versus build cost, same as always. Our free feasibility analyser is the 30 second version of that check.
Put numbers on it
Take a $750,000 house renting at $550 a week. 20% deposit, 6.5% interest only, 39% tax bracket, growth at the 30 year national average of 6.4%.
Same house, same rent, same growth. Only the tax treatment changes.
As a new build, it costs you about $113 a week after tax in year one, and the cash flow turns positive around year 6.
As established stock, the same property costs $296 a week after tax, and doesn’t break even until around year 9.
Sell after 10 years and the new build path finishes roughly $79,000 ahead. Not from picking a better house. Purely from the rulebook.
Those aren’t my opinions, they’re compounding and a tax table. You can run your own numbers, on your own address, in our free property growth calculator. It has the new rules built in and shows both paths on one chart.
Before you rush out and buy a house and land package
To be clear, this is not a blanket “buy new” memo. Three honest caveats.
Land grows, buildings don’t. A new build usually means more building and less land for your money, and land is the part that compounds. A tax advantage on a property with weak land content can still lose to an established house on a good block in a better suburb. The calculator gives both paths the same growth rate. The real world rarely does.
The suburb still decides most of the outcome. The gap between an average suburb and a good one over 10 years is a lot more than $79,000. Tax treatment is a real input now, but it’s the second question, not the first.
Rules change. This package was passed by one parliament and can be amended by the next. Anything with a 10 year horizon deserves advice from your accountant, not just a calculator and a bloke from Wangaratta.
What I’d actually do with this
If you already own established property from before May 2026, relax. You’re grandfathered.
If you’re buying your next one, the new-versus-established question now has a real dollar answer attached, and it’s different for every price point, rent and tax bracket. Run it before you assume either way.
If you take one thing from this: the government just started paying investors to add housing stock instead of bidding up the existing stuff. Whether that’s good policy is a pub argument. That it changes your buying maths is just arithmetic.
Want the numbers run properly on a suburb, not a national average? That’s a call, not a comment section.