If you’ve been putting off a decision on your own home or your next investment property because of the negative gearing changes announced in the May 2026 Federal Budget, it is worth reading on before you rule anything out. Since Budget night, we have had a steady stream of conversations with clients who assume the changes apply to them, when in most cases they simply do not. The reforms are real and they are now law, but they are also far more targeted than many of the headlines suggested. For a large number of Queenslanders, particularly anyone who already owns their home, there is still a clear and legitimate path to keep building a property portfolio.
From 1 July 2027, negative gearing on established residential properties will be restricted to properties bought before 7:30pm AEST on 12 May 2026 (Budget night). If you owned your property before that time, including a home you have lived in yourself, the existing negative gearing rules continue to apply for as long as you hold it. This means you can still move out of your current home, turn it into an investment property, and purchase a new home to live in, without losing the ability to negatively gear the original property. Separately, the Budget has preserved full negative gearing and capital gains tax concessions for new builds, meaning properties built on vacant land or knock-down rebuilds that increase the number of dwellings on a site. A single house replaced with another single house does not qualify, but a block replaced with two or three dwellings does. For anyone still keen to invest, these two pathways, grandfathering and new supply, remain very much open.
Turning Your Home Into an Investment Property Is Still on the Table
A lot of the anxiety we are hearing from clients comes down to a simple misunderstanding. People assume that because they are only just now considering turning their home into a rental, they will be caught by the new rules. That is not how the transitional arrangements work.
The negative gearing changes apply based on when a property was acquired, not on when you decide to rent it out or how it is currently being used. If you owned your home before 7:30pm on 12 May 2026, that property is grandfathered under the old rules regardless of what you do with it afterwards. So if you bought your home in 2019, lived in it, and are now considering moving out and renting it while you buy a new place to live, the rental losses on that original property can still be offset against your salary and other income, exactly as they could before the Budget.
This is a common and completely legitimate strategy for growing a portfolio without selling an existing asset. You keep the equity you have built, you keep the negative gearing benefit on that property, and you free yourself up to purchase a new owner-occupied home using whatever equity and borrowing capacity you have available. The two transactions, converting your existing home to an investment and buying a new one to live in, are treated separately and neither one disqualifies the other from the tax treatment it is entitled to.
Where we would encourage some care is around timing and lending structure. Moving from an owner-occupied loan to an investment loan on the same property, while simultaneously taking on new owner-occupied debt, involves a few moving parts that a lender will want to see clearly. Getting the finance sequencing right, and understanding how a lender will assess your serviceability across both properties, is where a broker earns their keep.
New Builds Still Come With Full Tax Support
The second pathway that remains fully intact is investing in new housing supply. The Government has been explicit that the intent behind these changes is to redirect investment away from established homes and toward new dwellings, so the concessions for new builds have been left largely untouched.
There are two clear ways to take advantage of this if you are considering a new investment from here.
Buying vacant land and building on it. Any residential construction on land that did not previously contain a dwelling qualifies as a new build under the Budget changes. This includes house and land packages, custom builds, and off the plan apartments still under construction. Investors who go down this path retain full negative gearing against their other income, along with access to the 50% capital gains tax discount when they eventually sell.
Knocking down an existing property to build multiple dwellings. This is the one that catches people out, because the rule is more specific than it first appears. If you buy an older established property, demolish it, and replace it with two or three new dwellings on the same land, such as a duplex or a small townhouse development, those new dwellings qualify as new builds and keep full access to negative gearing and the CGT discount. What does not qualify is a straight one for one replacement, where an older house is knocked down and rebuilt as a single new house on the same block. Because that does not add to the housing supply, it is treated the same as any other established property purchase under the new rules.
The distinction comes down to whether or not there is an actual increase in the number of dwellings on the site. One house becoming one newer house, no matter how impressive the finish, does not meet the test. One house becoming two or three does.
Why This Matters for Your Strategy
Property investment has never been solely about negative gearing, but it has certainly shaped how a lot of Australians have approached building a portfolio over the past few decades. What the 2026 Budget has done is narrow the field rather than close it. If you already own property, your existing negative gearing position is protected. If you are looking to invest for the first time, or add to what you already have, building new or buying land to build on keeps every tax advantage that was previously available.
What has changed is the amount of planning required before you commit to a purchase. Getting the property type wrong, or misunderstanding the acquisition date rules, could mean the difference between a fully deductible investment and one that offers no negative gearing benefit at all from 2027 onward. This is the kind of detail worth working through properly before you sign a contract, rather than after.
If any of this has changed how you are thinking about your next move, whether that is converting your current home into an investment property, or looking at land and new builds as your next purchase, it is worth having a proper conversation about how the finance side comes together. Get in touch with Adam at PierPoint Lending to talk through your options and make sure your next step is structured the right way from the start.
Frequently Asked Questions
If I bought my home years ago but only decide to rent it out after the Budget, does it still qualify for negative gearing?
Yes. The negative gearing rules that apply depend on when you acquired the property, not when you start renting it out. If you owned your home before 7:30pm AEST on 12 May 2026, it is grandfathered under the existing rules, and you can convert it to a rental property at any point afterwards without losing that treatment. The rental losses can still be offset against your salary and other income for as long as you hold the property.
Can I really buy a new home to live in while keeping negative gearing on my old one?
Yes, provided you owned the original property before Budget night. The two properties are assessed separately. Turning your existing home into an investment does not affect its grandfathered status, and purchasing a new home to live in is a separate transaction that does not disqualify the investment property from the tax treatment it is entitled to. The main thing to plan carefully is the lending structure across both properties, since you will likely be moving from an owner-occupied loan to an investment loan on one property while taking on new owner-occupied finance for the other.
Does knocking down a house and rebuilding a bigger one count as a new build?
No. To qualify as a new build under the Budget changes, a knock-down rebuild needs to result in more dwellings than existed on the site before, such as replacing a single house with a duplex or a small group of townhouses. A one for one rebuild, where a single house is demolished and replaced with a single new house, does not qualify, no matter how much larger or more modern the new home is. It is treated as an established property for negative gearing purposes.
What if I buy vacant land now but do not finish building until after 1 July 2027?
Vacant land itself is not a residential property, so the new build rules apply to what you construct on it rather than the date you purchased the land. Any residential dwelling constructed on previously vacant land is treated as a new build, retaining full negative gearing and CGT discount eligibility, regardless of exactly when construction is completed. As always, the fine detail of how this is administered will depend on the final legislation and ATO guidance, so it is worth confirming your specific circumstances before committing.
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