At Ascent Wealth Solutions, we’ve been asked whether negative gearing is “over” following the passage of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 on 26 June 2026.

Media coverage of the reforms has led many Australians to question whether negative gearing remains available, how the new negative gearing rules work, and what the changes may mean for property investment strategies.

The position is more nuanced than some headlines suggest. While some rules have changed, other structures and investment types continue to operate under their existing arrangements. The key consideration is determining which rules apply and how they may affect a particular strategy. Whether a geared investment strategy is appropriate will depend on an investor’s objectives, cashflow position and risk tolerance.

Understanding what has changed, what has remained the same, and how the rules may apply to your circumstances is important before making decisions about an investment strategy.

The two changes at the centre of the conversation

Both commence 1 July 2027:

• Negative gearing on residential property is limited to new builds.
• CGT for individuals, trusts, and partnerships moves from the 50 per cent discount to CPI cost base indexation plus a minimum 30 per cent tax on realised gains.

Negative gearing: the detail

• Losses on established residential properties acquired after 7:30pm AEST on 12 May 2026 are quarantined against residential property income only.
• Properties acquired before that time are grandfathered.
• New build residential properties continue to qualify for negative gearing.
• Widely held trusts, most managed investment trusts, and superannuation funds, including SMSFs, are excluded from these changes.

CGT: the detail

• The 50 per cent discount is replaced with CPI cost base indexation and a minimum 30 per cent tax rate on realised capital gains.
• Only gains accruing after 1 July 2027 are affected. Pre-1 July 2027 gains retain the 50 per cent discount on a pro-rated basis.
• Companies and superannuation funds keep their current CGT settings.
• Investors in new build residential property can choose between the current 50 per cent discount or the new arrangements.

What has not changed

• Negative gearing still applies to shares, ETFs, managed funds, and commercial property.
• Superannuation funds and widely held trusts are excluded from the negative gearing changes.
• Existing residential properties acquired before 12 May 2026 are grandfathered.
• Companies and super funds keep current CGT rules.
• Pre-1 July 2027 gains keep the 50 per cent discount.

Where gearing remains available

Borrowing strategies remain available through a range of structures, including:

• Diversified share and ETF portfolios using margin loans or internally geared funds.
• Commercial property, where rules and structures are unchanged.
• Superannuation and SMSFs, which continue to operate under their existing taxation arrangements.
• New build residential property, which retains negative gearing and offers a CGT election.

The reforms have changed the treatment of some geared investment strategies but not others.

This means the impact of the changes depends on the asset type, ownership structure, timing of purchase and investor circumstances. Investors should carefully consider their objectives, cashflow capacity and risk tolerance before adopting or continuing a geared strategy.

Turning strategy into practical planning

For some investors, gearing may form part of an overall financial planning strategy where borrowing risks, cashflow capacity and investment objectives have been carefully considered.

If you would like to review whether your current strategy is still fit for purpose, you are welcome to book a complimentary 20-minute call.

Frequently Asked Questions

What changed for negative gearing under the 2026 Budget?

The reforms limit negative gearing on residential property to new builds from 1 July 2027, while established residential properties acquired after 12 May 2026 are subject to the new rules described in this article.

Does negative gearing still apply to shares and ETFs?

Yes. Negative gearing continues to apply to shares, ETFs, managed funds and commercial property under the current rules and announced reforms.

Are existing investment properties affected?

Residential properties acquired before 12 May 2026 continue under the grandfathering provisions described in the legislation.

Should I change my investment strategy because of the reforms?

The answer depends on your objectives, cashflow capacity, investment timeframe and risk tolerance. Reviewing your strategy before making changes may help ensure it remains appropriate for your circumstances.

General Advice Warning

General information only. This article does not consider your personal circumstances. Please seek personal financial advice before acting.

This article is not tax or credit advice. Tax outcomes depend on your individual circumstances and current law. Interest rates referenced are indicative only, at the time of writing, and are not offers of credit. Please seek advice from a registered tax agent for tax matters and a licensed credit provider for credit matters.

Disclosures: Stephanie Yeung is an Authorised Representative of Personal Financial Services Limited ABN 26 098 725 145, AFSL 234459. Article prepared July 2026.

References

• Australian Taxation Office, Tax reform – Boosting home ownership – Reforming negative gearing and capital gains tax, last updated 29 June 2026.
• The Treasury, Budget 2026–27 tax system changes, Australian Government.
• Treasury Ministers, Government introduces first tranche of tax reform legislation, media release, 28 May 2026.