August 2026 · Issue #3
Negative gearing changes from July 2027 — and the exemption most reports leave out
From 1 July 2027 negative gearing on residential property is being limited to new builds, and the 50% capital gains tax discount is being replaced. If you already own an investment property, there is an important detail worth knowing before you do anything.
This is the biggest structural change to property investment taxation in a generation, and the coverage of it has been noisy. Here is what has actually been legislated, in plain terms.
What changes
From 1 July 2027, negative gearing deductions for residential property will generally be limited to newly built homes. Separately, the 50% capital gains tax discount for individuals, trusts and partnerships is being replaced with cost base indexation plus a 30% minimum tax rate on capital gains.
The changes at a glance
| Start date | 1 July 2027 |
| Negative gearing limited to | new builds |
| 50% CGT discount | replaced |
| Replaced with | indexation + 30% min. rate |
| Announcement date | 12 May 2026 |
The part that gets left out: grandfathering
Properties held at the announcement date — 12 May 2026 — are exempt from the negative gearing changes. If you already owned your investment property before that evening, the negative gearing rules that applied when you bought it continue to apply to it.
On the capital gains side, the new treatment applies only to gains that accrue after 1 July 2027. The growth your property has already banked is not being retrospectively taxed under the new system.
If you bought before 12 May 2026, the headline you read almost certainly does not describe your situation.
I am flagging this because a good number of the articles circulating on this topic skip the grandfathering entirely, and some of them are written by firms with an advisory service to sell. The change is real and significant for future purchases. It is a much smaller event for someone who already owns.
The genuine risk is a behavioural one
The concern worth taking seriously is not the tax itself — it is what the tax pushes people into. Steering investors toward new stock creates obvious pressure to buy off-the-plan product in areas where a lot of it is being built at once.
New builds carry a developer margin, and in a suburb with plenty of near-identical supply there is very little scarcity to drive growth. A tax deduction on an asset that does not appreciate is a poor trade. The compounding maths is unforgiving: an $800,000 property growing at 4% a year reaches about $1.75M in twenty years. At 7% it reaches roughly $3M. No deduction closes a gap like that.
The Redlands read
What I would do if I owned an investment property here
First, work out whether you are actually affected. If you have held the property since before 12 May 2026, you are grandfathered on negative gearing — and a lot of the anxiety around this simply does not apply to you.
Second, do not panic sell, and do not restructure ownership on the strength of a newsletter, including this one. Anything involving trusts, transfers or timing is exactly the sort of decision where a decent accountant earns their fee several times over.
Third, if you are buying from here, the change makes asset quality more important, not less. Cash flow, buffers and scarcity matter more when a chunk of the tax cushion has been removed. In the Redlands that argues for established homes on land in the tightly held pockets over volume product — which, for what it is worth, is what the last decade of local sales data already argued for.
Finally, if your plan was always to sell before mid-2027, this is worth a conversation with your accountant sooner rather than later.
None of the above is tax advice, and I am not qualified to give it. It is a summary of an announced change and my read on how it interacts with this local market. Take the specifics to your accountant.
Own an investment property in the Redlands? Happy to talk through where it sits — and your accountant should be your next call after that.
What’s mine worth?
Greg Leigh — local Redlands specialist, Queensland Sotheby’s International Realty. Published 12 August 2026.
Sources: Australian Taxation Office, Tax reform — Boosting home ownership: reforming negative gearing and capital gains tax; 2026–27 Federal Budget tax reform factsheet. Commentary context via Property Update (12 August 2026), noting that piece is authored by an advisory firm and does not mention the grandfathering provisions.