The Hidden Opportunity Behind The Negative Gearing Changes

You’ve probably heard the headlines: “Negative gearing is ending” or “Property investment is no longer worth it.”  

What if the proposed tax reforms don’t hurt property investors but actually create one of the biggest advantages for new builds in years?

Here’s what many Australians are missing: the proposed negative gearing and capital gain reforms are expected to impact established properties far more than new builds.

In fact, newly constructed homes will retain key tax advantages that investors have relied on for years, including negative gearing benefits and more favourable CGT outcomes. As a result, house and land packages and newly built homes* could become one of the most attractive investment opportunities in Australia’s changing property market.

*Reference of “newly built homes” is subject to government eligibility criteria. To qualify, the new build must be seen to be increasing existing housing supply (e.g. knocking down an existing dwelling to build a dual occupancy property). Visit treasury.gov.au for more information.

The 50% CGT Discount is Exclusively Yours

Here are what most investors fear

“The proposed changes to the Capital Gains Tax discount is going to stall the market”

Here’s the Reality

This penalty applies almost entirely to established properties.

Here’s The Facts

Buyers of most newly built homes retain a unique competitive advantage.  They can choose between the legacy 50% CGT discount (favours short-term investment) or the new indexation formula (often favours long-term investment). Investors buying established property are forced to use the 30%, indexed formula.

For investors focused on being agile with their investment strategy, this positions new builds as one of the few remaining property types with enhanced tax flexibility and stronger after-tax returns.

Negative Gearing Now Restricted to New Builds

Here are what most investors fear

“Property investment is dead because negative gearing is being restricted.”

Here’s the Reality

Negative gearing is not disappearing altogether. It is expected to remain available for many newly constructed homes.

Here’s the Facts  

The proposed reforms would significantly change how investors can claim rental losses on established property. The government has turned new construction into a privileged asset class.

From 1 July 2027, investors buying established homes lose the ability to offset rental losses against their salary.  Conversely, investors purchasing newly built homes can enjoy this massive tax shelter. 

It’s important to note that under the federal budget changes, properties purchased prior to 12 May are considered grandfathered and will be exempt from negative gearing changes.

This effectively creates a major incentive for new builds as a preferred investment class for Australians seeking stronger tax outcomes, depreciation benefits and future growth potential.

How Investors Can Maximise the Benefits of the Proposed Tax Reforms

As tax incentives increasingly favour new construction, house and land packages are becoming a smarter option for both first-time investors and experienced property buyers.

In key growth corridors, buyers purchasing house and land packages are gaining access to:

• Capital gain tax and negative gearing advantages under the proposed reforms

• More affordable entry prices compared to inner-city established homes

• Increased rental demand from growing communities

• Low maintenance and renovation cost compared to established properties

• Modern, low-maintenance homes designed for today’s lifestyles

For investors looking for smarter long-term value, now may be the time to explore high-growth Simonds House & Land Packages,  townhomes and  dual occupancy homes before demand accelerates further.

Our Finance Partners Breakdown your Burning Questions

Luke Burruto, business development manager at Loan Gallery Finance, an award-winning and highly respected mortgage brokerage offering personalised finance solutions.

1. What will be the impact on the rental market?

The proposed reforms are unlikely to ease the tight rental market.

Fewer investors may purchase established rental properties, reducing supply, but many of these homes would likely be bought by first home buyers (who exit renting), broadly offsetting any effect on supply and demand.

Higher net overseas migration is expected to tighten rental conditions further, supporting investor demand (as they seek higher yields) and first home buyer activity (as they seek to exit renting), particularly in growth corridors.

2. What can be expected of house prices in Australia?

While the budget reforms may place slight downward pressure on prices, this is minimal compared to the impact of higher interest rates and the widening gap between prices and borrowing capacity.

The national median value may soften overall, but outcomes will vary. Sydney and Melbourne are expected to remain more resilient, particularly in growth corridors supported by the 5% deposit scheme and the demand from higher migration forecasts. Adelaide, Perth and Brisbane face greater correction risk following unprecedented growth, although growth corridors are still likely to remain the most protected markets.

3. Where should we be seeing increased sales activity?

Melbourne & Victoria is likely to see stronger relative activity due to affordability constraints nationally and continued interest rate pressure, which are both shifting demand toward more accessible markets.

Given the cycle is now at its peak in the states that have had record price growth, demand may also flow from such states into Victoria, particularly from stretched interstate buyers who are seeking an affordable alternative.

General Advice Disclaimer: The information provided is general in nature only. It has been prepared without taking into account your personal objectives, financial situation, or needs. Before acting on this information, you should consider its appropriateness having regard to your financial situation, objectives, and needs. If the information relates to the acquisition of a specific financial product, you should obtain and review the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before making any decision.