Negative Gearing Serviceability Split
New Build vs Established Simulator
See how the proposed 1 July 2027 negative gearing changes could affect investment-property serviceability and cash flow.
✅ Current as of 16 June 2026 · estimate only · not a credit quote
Your Numbers
Proposed Tax Treatment Status
Established losses quarantined to rental income / CGT, carried forward. Some lenders factor negative-gearing tax benefits into serviceability; treatment varies by lender.
Walkthrough video — coming soon
A short walkthrough showing how the proposed negative-gearing split impacts assessed borrowing capacity will live here.
The 2026–27 Budget Property Tax Changes — What's Proposed, and What It Could Mean for Borrowing
Important: these measures were announced in the 2026–27 Federal Budget (12 May 2026) and legislation has been introduced, but they are not yet law and the detail may change before they take effect. The summary below is general information only — the tax treatment of your situation is a matter for your accountant or registered tax agent.
What's proposed for negative gearing
From 1 July 2027, for established residential property purchased after 7:30pm AEST on 12 May 2026, net rental losses would no longer be deductible against salary or other non-rental income. Instead they'd be quarantined — offset only against residential rental income or capital gains from rental property, with any excess carried forward.
- Grandfathering: property you already held, or had under contract, before 7:30pm on 12 May 2026 keeps the current negative gearing rules until you sell.
- New builds exempt: newly built residential dwellings keep negative gearing, even if bought after the cut-off.
The CGT side (also proposed)
Separately, the Budget proposes replacing the 50% CGT discount from 1 July 2027 with cost-base indexation plus a 30% minimum tax on gains accruing after that date, applying broadly across CGT assets. Gains up to 30 June 2027 keep the 50% discount, and investors in new residential dwellings would be able to choose between the 50% discount and the new indexation regime. (Super/SMSFs are excluded; the main residence exemption is unchanged.)
Why it matters for borrowing
For an established property bought after the cut-off, the salary-tax benefit of negative gearing would no longer apply once the rules start. Because some lenders factor negative-gearing tax benefits into serviceability, this could affect borrowing capacity on affected purchases as lenders update their assessment policies. How much depends on the lender, your circumstances and the final legislated rules — it isn't a fixed figure, and many lenders already assess investment income conservatively.
How we help
We help you understand how different lenders are likely to assess investment-property serviceability under the proposed rules, and match your plans to suitable lenders. Your accountant or registered tax agent advises on the tax; we focus on the lending side.
Frequently asked questions
Is this negative gearing change currently law?→
No. These measures were announced in the 2026–27 Federal Budget (12 May 2026) and legislation has been introduced, but they are proposed and not yet law. The details may change before they take effect. Seek advice from your accountant or registered tax agent before making decisions.
What is the proposed cut-off date for established properties?→
The negative gearing restrictions are proposed to apply to established residential properties purchased after 7:30pm AEST on 12 May 2026. Properties held or under contract before this cut-off are proposed to keep current rules under grandfathering provisions.
Are new builds exempt from the proposed negative gearing restrictions?→
Yes, newly built residential dwellings keep negative gearing eligibility, even if purchased after the 12 May 2026 cut-off. This allows owners to continue deducting net rental losses against salary or other non-rental income.
How do lenders factor negative gearing into borrowing capacity?→
Many lenders factor negative gearing tax benefits into their serviceability assessments by adding back expected tax refunds into personal cash flow indices. If negative gearing is restricted for established properties, lenders may remove this add-back for affected purchases, which could reduce assessed borrowing capacity.
What are the proposed Capital Gains Tax (CGT) changes?→
Separately, the Budget proposes replacing the 50% CGT discount from 1 July 2027 with cost-base indexation plus a 30% minimum tax on gains accruing after that date. Investors in new residential dwellings would be able to choose between the 50% discount and the new indexation regime on disposal.
Built by Virginia Graham Riches, founder of Model Mortgages and host of Property & Mortgage Insights Australia, supported by a specialist team of five brokers through Finance on the Coast.
Book a Strategy Session to Review Your Property Lending OptionsWhat it estimates: The possible serviceability and cash-flow difference between a new-build and an established investment property under the proposed negative-gearing changes.
Key assumptions: Established property bought after 7:30pm AEST 12 May 2026 would lose the ability to offset rental losses against salary income from 1 July 2027; new builds and grandfathered/under-contract properties keep current treatment; sample rate 9.5%; an illustrative marginal tax rate is assumed. Lender treatment of negative gearing varies.
Current status (proposed, not law): Announced 12 May 2026 Budget; Bills introduced to Parliament 28 May 2026; not yet passed. From 1 July 2027, negative gearing for established residential property bought after the cut-off would be limited (losses quarantined to rental income/CGT, carried forward); new builds exempt. The 50% CGT discount would be replaced from 1 July 2027 with cost-base indexation plus a 30% minimum tax on gains accruing after that date (new builds can choose). SMSFs and widely-held trusts excluded. Main residence unchanged.
Sources: budget.gov.au/content/04-tax-reform.htm; PwC (pwc.com.au); William Buck (williambuck.com).
Estimate only — not a quote, credit assessment, tax, or personal advice. Based on proposed measures that may change before becoming law. Actual figures vary by lender and circumstances. General information only; Model Mortgages Pty Ltd, Australian Credit Licence 387460. Tax matters: confirm with your accountant.
This calculator covers one pillar: Income & Serviceability.
Your real borrowing outcome depends on all five assessment pillars working together — income, expenses, assets, security and borrower profile. A strong result in one pillar can be cancelled out by a constraint in another.
To see how this fits your whole position — your full servicing picture on one side and this scenario on the other — and which other pillars are helping or holding you back, run the full diagnostic at Structur.
See your full picture at Structur →Structur is the diagnostic step — structure before strategy, strategy before products. When you're ready to act, it connects you to a specialist broker. Educational diagnostic only; not credit approval or personal advice.