The rules have changed, but the headlines can be misleading
The 2026 Federal Budget delivered the biggest change to property investor taxation in years. Negative gearing has not disappeared. Instead, the Government is redirecting the concession towards new housing supply. That distinction is important for anyone buying an investment property in Brisbane.
Under the announced reform, residential property acquired before 7:30pm AEST on 12 May 2026 is grandfathered for negative gearing purposes. For established residential property bought after that time, the new rules from 1 July 2027 mean rental losses cannot be deducted against unrelated income such as wages. Those losses can still be offset against residential property income, including capital gains, and excess losses can be carried forward.
New builds receive different treatment
Investors buying qualifying new builds can continue to negatively gear them before and after 1 July 2027. Treasury says the policy is designed to shift more investor capital towards adding housing supply. The Government noted that more than 80 per cent of new investor lending had been going to existing homes rather than creating new dwellings.
The definition matters. Government material says a new build can include a dwelling built on vacant land or a redevelopment where an existing property is demolished and replaced with a greater number of dwellings. A simple knockdown rebuild or substantial renovation that does not increase housing supply does not qualify merely because the finished home feels new.
Capital gains tax is changing as well
From 1 July 2027, the Government will replace the standard 50 per cent CGT discount with an inflation based discount and introduce a minimum 30 per cent tax rate on capital gains. Treasury says the changes apply to capital gains accruing from 1 July 2027 when those gains are realised.
There is a special choice for investors who buy new builds. They can choose either the existing 50 per cent CGT discount or the new inflation based arrangements and minimum tax. Tax outcomes depend on individual circumstances, so buyers should obtain advice from an appropriately qualified tax professional before making an investment decision.
What could this mean for established Brisbane property?
The most immediate question is whether fewer investors will compete for established houses and units. There are early signs of a demand adjustment. Cotality’s July Housing Chart Pack said Budget changes, affordability pressures and other demand headwinds had cooled buyer activity. ABC reporting in July also described south east Queensland agents seeing fewer investors in some markets.
It is too early to say that investors have permanently abandoned established Brisbane property. The latest official ABS lending data available when this article was prepared covered the March quarter, before the Budget announcement. It showed investor loan commitments nationally were still 18.8 per cent higher in number than a year earlier, despite falling 5.3 per cent over the quarter. The June quarter release is due on 14 August 2026 and will be one of the first important official tests of post Budget investor behaviour.
The tax change does not make established property a bad investment
Tax is one input into an investment decision, not the asset itself. An established property may still offer scarce land, a proven tenant market, strong owner occupier appeal or a location where new supply is difficult to create. The question is whether those advantages justify the price and holding costs without relying on a tax deduction against salary.
For some investors, the change may favour properties that are closer to neutral or positive cash flow. For others, new construction may become more attractive because the negative gearing treatment is retained. The correct answer will depend on income, debt, tax position, risk tolerance and the property itself.
Brisbane’s Inner North shows the cash flow challenge
Murray McCarthy’s June 2026 Inner North report recorded house yields ranging from about 2.3 per cent in Alderley to 3.1 per cent in Stafford Heights. Unit yields were higher, around 3.7 per cent to 4.0 per cent in the markets sampled. Vacancy was below 1.2 per cent across the precinct, showing tight rental conditions.
Those numbers help explain why the tax change matters. A highly geared investor buying an established house on a low gross yield may face a significant holding shortfall. A unit with a higher yield may reduce that gap, although body corporate and other ownership costs must be considered. The property type decision has become even more dependent on real cash flow.
Do not rush into a new build simply for the tax treatment
A tax concession cannot rescue a poor property. New builds need the same scrutiny as established homes. Investors should examine developer quality, contract terms, land component, building density, competing future supply, body corporate costs where relevant and the price premium attached to being new.
In some areas, a well located established property may still be the stronger long term asset even if its tax treatment is less generous. In others, a new townhouse or house and land package may combine genuine demand with the new tax settings. The policy changes the calculation. It does not replace property selection.
What Brisbane buyers should do now
First, work out whether the property is being purchased as a home or investment. The negative gearing change is an investor issue, not a reason for owner occupiers to change a sound home buying brief. Second, investors should model cash flow under the new rules rather than relying on assumptions based on the old system.
Third, compare established and new property on total merit. Price, rent, vacancy, ongoing costs, land, building quality, tenant demand and resale appeal should all be considered. Finally, obtain personal tax advice. A buyers agent can help assess the property, but should not tell a client what their personal tax outcome will be.
FAQs
When do the new negative gearing rules start? The changed deduction treatment is scheduled from 1 July 2027, with established properties purchased after 7:30pm AEST on 12 May 2026 captured by the new framework.
Are existing investment properties grandfathered? The Government says properties purchased before the Budget announcement time remain under the existing negative gearing arrangements until sold.
Can new builds still be negatively geared? Yes, qualifying new builds retain negative gearing under the announced reform.
