Last Updated: June 24, 2026
Editor’s Note (June 2026): This article was originally based on the Federal Budget 2026-27 announcement. Since publication, the Federal Government has reached an agreement with the Greens to support the proposed negative gearing and capital gains tax reforms through Parliament. At the time of writing, the legislation is awaiting final parliamentary approval. We will continue updating this article as legislation, explanatory materials and implementation details are released.
Latest Update: Greens Deal Brings Negative Gearing Changes Closer
Following the Federal Budget 2026-27 announcement, the Federal Government has now secured support from the Greens for its proposed changes to negative gearing and capital gains tax.
While the legislation has not yet passed Parliament, the agreement significantly increases the likelihood that the proposed reforms will become law.
As part of the agreement, additional housing measures have also been announced, including restrictions on new self-managed super fund (SMSF) borrowing arrangements for residential property.
For property investors trying to understand the latest changes to negative gearing, here’s a quick summary of what has been proposed so far.
Quick Snapshot Of The Proposed Changes To Negative Gearing
| Change | Current Proposal |
|---|---|
| Established Residential Properties | Rental losses from established residential properties purchased after Budget Night (7:30 PM AEST on 12 May 2026), can no longer offset salary, wages or other non-property income. |
| Grandfathering | Existing investment properties held before Budget Night (7:30 PM AEST on 12 May 2026) are expected to remain under the current rules. |
| New Residential Builds | Newly built residential properties would continue to qualify for full negative gearing benefits. |
| Property Portfolio Offsets | Losses appear likely to remain available to offset profits from other residential investment properties within a portfolio. |
| Capital Gains Tax | The current 50% CGT discount would be replaced with an inflation-adjusted discount model and a minimum 30% CGT rate. |
| SMSF Borrowing | New borrowing arrangements through SMSFs for residential property would no longer be permitted. Existing arrangements are expected to be grandfathered. |
| Parliamentary Status | Awaiting final parliamentary approval. |
What Changed Following The Labor-Greens Agreement?
One of the most significant additions to the proposed reforms is the restriction on new SMSF borrowing arrangements for residential property.
Currently, SMSFs can use limited recourse borrowing arrangements (LRBAs) to acquire residential investment properties. Under the agreement reached between Labor and the Greens, new borrowing arrangements for residential property would no longer be permitted.
Importantly, existing SMSF borrowing arrangements and residential properties already held through those arrangements are expected to be protected under grandfathering provisions.
While the broad direction of the reforms is now clearer, investors are still waiting for the final legislation and explanatory materials to understand exactly how the rules will operate in practice.
Understanding The Proposed Changes To Negative Gearing
Following the Federal Budget 2026-27 announcement and the subsequent agreement between Labor and the Greens on the proposed changes to negative gearing, many Australian property investors are trying to understand exactly how the proposed reforms could affect their tax position, rental income and future investment decisions.
One of the biggest questions is whether losses will be quarantined to individual properties or whether investors can continue offsetting profits and losses across their property portfolio.
The answer could have a significant impact on future tax outcomes.
Ever since the Government announced proposed changes to negative gearing, property investors have been asking the same question:
“Hang on… are losses quarantined to each individual property, or can they still be offset across my portfolio?”
It’s a pretty important detail.
Because the answer could be the difference between a minor inconvenience and a completely different investment landscape.
What Changes to Negative Gearing Have Been Proposed?
Under the Federal Budget 2026-27 proposal, negative gearing would generally be limited to new residential builds purchased from 1 July 2027, while existing investment properties held before Budget night would be grandfathered.
The proposed changes to negative gearing are designed to encourage investment in new housing supply, although the detailed legislation has not yet been released.
While the headline announcement has received significant attention, the detailed legislation is still being drafted and many technical questions remain unanswered.
Can You Still Offset Property Losses Across Your Portfolio?
The Good News (Sort Of)
Based on the information released so far, the proposed changes to negative gearing do not appear to quarantine losses on a property-by-property basis.
Instead, the current understanding is that losses from affected residential properties would be quarantined within a residential property pool.
In plain English:
If one property loses money and another property makes money, the loss can still offset the profit.
| Property | Annual Result |
| Property A | ($20,000) Loss |
| Property B | $15,000 Profit |
| Property C | $5,000 Profit |
Under the proposed rules, the $20,000 loss would likely offset the $20,000 profit from the other properties.
Net result?
Zero taxable rental income.
So far, so good.
What Changes?
The major change is that losses from affected established residential properties would no longer be used to reduce:
- Salary and wages
- Business income
- Interest income
- Other non-property income
Instead, those losses would generally be restricted to:
- Residential rental income
- Future residential property capital gains
In other words, the Government appears to be saying:
“We’re still happy for property losses to offset property profits… we just don’t want them offsetting everything else.”
The Scenario Nobody Wants
Now imagine a different version.
Let’s say losses were quarantined per property.
Using the same example:
| Property | Annual Result |
| Property A | ($20,000) Loss |
| Property B | $15,000 Profit |
| Property C | $5,000 Profit |
Under a strict property-by-property system:
- You would pay tax on the $20,000 profit from Properties B and C.
- The $20,000 loss from Property A would be trapped.
- You couldn’t use it until that specific property became profitable or was sold.
That would be a dramatically harsher outcome.
Fortunately, that’s not what the Government appears to be proposing.
At least not yet.
The Problem? Nobody Knows For Certain
And this is where things get interesting.
The Budget announcement provides the broad policy direction, but the actual legislation is where the detail lives.
Questions still remain around:
- Trust ownership structures
- Mixed-use properties
- Former principal residences
- Carried forward losses
- How future capital gains will interact with quarantined losses
- Ownership percentages and joint ownership arrangements
As always, the devil isn’t in the headline.
It’s buried somewhere around page 437 of the explanatory memorandum.
What Do These Changes To Negative Gearing Mean For Investors?
For investors with multiple properties, the impact may be significantly less severe than many headlines suggest.
If the current interpretation proves correct, portfolios with a mix of positively and negatively geared properties may still be able to offset losses against profits within the portfolio.
The biggest impact falls on investors who currently rely on rental losses to reduce PAYG income each year.
Those annual tax refunds could look very different in the future.
As more detail emerges around the proposed negative gearing reforms, investors will need to closely monitor how the legislation is drafted and ultimately implemented.
The TaxTank Take
The biggest lesson isn’t really about negative gearing.
It’s about visibility.
Every time tax rules change, investors who only look at their numbers once a year are left scrambling to understand the impact.
The investors who know their rental position, deductions, depreciation, capital growth and tax outcome throughout the year are the ones who can adapt quickly when Governments inevitably decide to “simplify” things again.
Because if there’s one thing we can guarantee, it’s that tax legislation changes far more often than property investors would like.
And occasionally, the explanation is longer than the legislation itself.
We’ll keep monitoring the proposed legislation as it’s released and provide updates as the details become clearer.
Until then, don’t believe every headline you read.
Especially the ones written before anyone has actually read the legislation.
Key Takeaways
- Existing investment properties are expected to be grandfathered.
- Negative gearing would generally be limited to new residential builds from 1 July 2027.
- Property losses appear likely to be offset against other residential property income within a portfolio.
- Losses may no longer be available to offset salary and wage income.
- The final outcome depends on legislation that is yet to be released.
Frequently Asked Questions About Negative Gearing Changes
Will negative gearing be abolished?
No. The current proposal limits negative gearing on certain residential properties purchased after 1 July 2027, while existing properties are expected to be grandfathered.
Can property losses still offset other properties?
Based on current information, losses appear likely to be pooled across residential properties rather than quarantined to individual properties.
When do the changes to negative gearing start?
The proposed commencement date is 1 July 2027, subject to legislation being passed.
Will existing investment properties be affected?
Properties held before Budget night are expected to remain under the current rules.
Why is the Government making changes to negative gearing?
According to the Federal Budget announcement, the proposed negative gearing reforms are intended to encourage investment in new residential housing and increase housing supply.
Have the changes to negative gearing passed Parliament?
No. At the time of writing, the Federal Government has secured support from the Greens for the proposed reforms, but the legislation is still awaiting final parliamentary approval.
What are the latest changes to negative gearing?
The latest developments include an agreement between Labor and the Greens supporting the proposed negative gearing reforms, capital gains tax changes and restrictions on new SMSF borrowing arrangements for residential property. Existing investment properties and existing SMSF borrowing arrangements are expected to be grandfathered.
How Can Property Investors Keep Track Of Changes to Negative Gearing?
As property tax rules become more complex, many investors are moving away from spreadsheets and annual tax estimates towards software that tracks rental income, expenses, depreciation and tax outcomes throughout the year.
Understanding your real-time property position can make it easier to assess the impact of future changes to negative gearing, capital gains tax and property deductions before tax time arrives.
What Happens If Negative Gearing Rules Change Again?
Property tax legislation changes regularly and future governments may introduce additional reforms.
For property investors, this makes it increasingly important to understand not only current rental performance but also the long-term tax implications of their investment strategy, including capital gains tax, carried forward losses and cash flow impacts.
How Can I Calculate The Impact Of Negative Gearing Changes On My Portfolio?
The impact will depend on factors such as:
• The number of properties you own
• Whether properties are positively or negatively geared
• Your taxable income
• Available depreciation deductions
• Future capital gains
Because every portfolio is different, investors often benefit from modelling multiple scenarios to understand how proposed changes could affect both annual tax outcomes and long-term wealth creation.
Is A Spreadsheet Enough To Manage Investment Property Tax?
For investors with a single property, a spreadsheet may be sufficient.
However, as portfolios grow and tax rules become more complex, many investors find it difficult to accurately track rental income, expenses, depreciation, capital gains tax, carried forward losses and changing tax legislation across multiple properties.
Having visibility over your property portfolio throughout the year can make it easier to understand the impact of tax changes before lodging your tax return.
How Can TaxTank Help Property Investors Manage Tax Rule Changes?
TaxTank helps Australian property investors track rental income, expenses, depreciation, capital gains tax and tax outcomes in real time.
Instead of waiting until tax time to understand the impact of changing legislation, investors can see how their property portfolio is performing throughout the year and make more informed decisions as tax rules evolve.
How Can Investors Manage Grandfathered Tax Rules Across Multiple Properties?
One of the challenges created by the proposed changes to negative gearing is that investors may end up managing multiple tax treatments across a single portfolio.
For example, an investor may own:
• Existing properties that remain under current negative gearing rules
• New properties purchased after the commencement date that fall under the new rules
• Properties with different capital gains tax treatments depending on when they were acquired
• Grandfathered SMSF investments alongside new investment structures
As tax legislation becomes more layered, accurately tracking which rules apply to which property can become increasingly difficult using spreadsheets alone.
This is where software like TaxTank can play an important role by automatically applying the correct tax treatment based on acquisition dates, ownership structures and legislative changes, helping investors maintain accurate records as rules evolve over time.
Why Does TaxTank Grandfather Tax Rule Changes?
TaxTank is designed to reflect the tax rules that apply to each asset or property based on when it was acquired.
When legislation changes, we don’t simply overwrite historical rules. Instead, TaxTank maintains the correct treatment for grandfathered assets while applying new rules where required.
This means investors can continue managing their portfolio in one place without needing separate spreadsheets or manual calculations to track different tax treatments across different properties.
As governments introduce new property tax measures, capital gains tax reforms or negative gearing changes, TaxTank updates the underlying rules so investors can focus on understanding the impact rather than calculating it themselves.
