By Rothschild Group (Settlements) Team | Perth, Western Australia
From 1 July 2027, negative gearing for Australian residential property will generally be limited to new builds. Established residential property acquired after 7:30 pm AEST on 12 May 2026 will be subject to different loss rules, while investments held before that announcement are exempt from the change. For a WA investor, this affects the tax modelling rather than the validity of the property purchase or settlement.Key takeaways
- New residential builds can continue to be negatively geared after 1 July 2027.
- Residential investments held before 7:30 pm AEST on 12 May 2026 are exempt from the new negative-gearing restriction.
- For established housing acquired after that time, excess residential property losses cannot generally be deducted against wages or other non-residential income.
- Those losses may still be used against residential property income and relevant capital gains, with excess losses carried forward.
- The conveyancing process remains separate from tax eligibility. Obtain tailored tax advice before signing.
What is changing from 1 July 2027?
The Australian Government's 2026–27 Budget reforms redirect negative-gearing concessions towards new housing supply. Treasury states that, from 1 July 2027, negative gearing of residential property will be limited to new builds. The reform is federal and applies to investors nationally, including people buying in Western Australia. Negative gearing commonly describes a situation where deductible expenses associated with an investment property exceed the income it produces. Under the existing general approach, an eligible net rental loss may reduce other assessable income. The reform narrows that treatment for affected established residential properties. The first stage of the reform has passed Parliament and is law. Further legislation has been developed for more detailed situations, including the definition of a new residential dwelling and transfers following death or relationship breakdown. This is one reason investors should not rely on a short online summary for a major purchase.Are existing investment properties protected?
Yes, the announced grandfathering protects residential investments held before 7:30 pm AEST on 12 May 2026. Treasury says the negative-gearing arrangements for those investments remain unchanged. The relevant acquisition and ownership facts should nevertheless be checked by a tax adviser, especially where there is a later transfer, change of entity, deceased estate or relationship breakdown. Grandfathering is attached to the legal rules, not merely to an investor's intention. Moving a property between an individual, company, trust or SMSF can have tax, duty, finance and asset-protection consequences. Do not restructure ownership based on a general assumption that the original treatment will automatically follow the property.What happens if you buy an established home after Budget night?
Treasury states that an investor who acquires established housing after 12 May 2026 can deduct losses against income from residential properties, including relevant capital gains, and can carry forward excess losses. However, from 1 July 2027, those losses cannot generally be deducted against non-residential income such as wages. This is sometimes called loss quarantining. It does not mean that every property expense is deductible, nor that every loss will eventually be available in full. Ownership structure, private use, capital expenditure, borrowing, related-party dealings and record keeping can all affect the result. Ask an accountant or tax lawyer to model the position using realistic rent, vacancy, interest, management fees, insurance, maintenance and land-tax assumptions. A property that only works because of a hoped-for tax refund may carry more risk than it first appears.What counts as a new build?
New builds retain access to negative gearing before and after 1 July 2027. The detailed legal definition matters. Treasury's second-stage consultation has addressed what qualifies as a new residential dwelling and possible treatment for affordable housing, social housing, NDIS housing, public housing and build-to-rent projects. Do not assume that recently renovated, substantially refurbished, newly subdivided or merely never-occupied property necessarily satisfies the final statutory test. Obtain written tax advice about the particular property and contract.Are the capital gains tax changes the same thing?
No. Negative gearing concerns the treatment of income and losses while the property is held. Capital gains tax concerns a gain or loss when a CGT event occurs, commonly on sale. From 1 July 2027, the Government is also replacing the general 50 per cent CGT discount with inflation-based arrangements and introducing a minimum 30 per cent tax rate on real capital gains. Treasury says investors in qualifying new builds may choose between the existing 50 per cent discount and the new arrangements. The new CGT arrangements apply to gains accruing from 1 July 2027 when realised. The application can be complex, particularly where a gain accrues across that date.Does the change affect a WA property settlement?
The tax reform does not prevent an investor from buying an established property or alter the ordinary legal steps for a WA transfer. The buyer still needs a valid contract, finance arrangements, duty assessment, verification, funds and a properly coordinated settlement. What changes is the investor's financial analysis. Before signing, confirm the proposed owner, borrowing structure and whether the property is said to be a new build. Changing the purchaser later can require seller consent and may create new duty, finance, tax or contractual issues. Rothschild Group (Settlements) can manage the WA property settlement and help identify conveyancing issues. Tax advice must come from an appropriately qualified accountant or tax adviser.Frequently asked questions
Is negative gearing being abolished?
No. The reform limits negative gearing for affected established residential property. New builds and grandfathered investments are treated differently.Can I still buy an established investment property?
Yes. The reform changes the tax treatment; it does not prohibit the purchase. The property's cash flow and after-tax outcome should be independently assessed.Will carried-forward losses expire?
Treasury states that excess affected losses can be carried forward. The detailed use and timing of those losses should be confirmed for your circumstances.Can Rothschild Group (Settlements) advise which ownership structure is best?
We can manage the conveyancing implications of the nominated purchaser. Selection of an ownership or tax structure requires tailored legal, tax and financial advice before the contract is signed.Planning a WA investment purchase?
Separate the transaction into two workstreams: obtain tax and financial advice on whether the investment and structure are suitable, then ensure the contract and settlement accurately implement the approved plan. Contact Rothschild Group (Settlements) for a settlement quote or contract review before signing. You can also use our WA stamp duty calculator as an initial estimate. This article is general information only and not legal, tax or financial advice. Tax reforms can change and may apply differently to each investor. Obtain advice from an appropriately qualified adviser.Source review completed 9 November 2026.
Authoritative sources
- Australian Treasury — Budget 2026–27 tax system changes
- Australian Treasury — capital gains tax and negative gearing, Tranche 2 consultation
- Australian Taxation Office — negative gearing reform implementation
About Rothschild Group (Settlements)
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