There are important changes coming to the way investment property losses and capital gains are taxed in Australia.

If you own an investment property — or are considering buying one — it is important to understand what is changing and when the new rules will apply.

What is changing?

From 1 July 2027, the Government is introducing changes to:

• Negative gearing for residential investment properties

• Capital gains tax (CGT)

• The way future capital gains are calculated and taxed

The rules are designed to encourage investment in new housing while changing the tax treatment of some investment income and capital gains.

1. Negative gearing changes

Currently, if your investment property makes a tax loss, you may generally be able to offset that loss against other taxable income, such as salary or business income.

For example:

Rental income: $30,000

Deductible expenses: $45,000

Rental loss: $15,000

Under the current rules, that $15,000 loss may be deductible against your other taxable income, subject to the usual tax requirements.

From 1 July 2027

Negative gearing will generally continue to be available for new residential builds.

However, for established residential properties purchased after 7:30pm AEST on 12 May 2026, rental losses will no longer be able to reduce other types of income such as salary or business income.

Instead, those losses can generally be:

• Offset against income from other residential property investments; and

• Carried forward to future years to be used against relevant residential property income, including certain capital gains.

What about properties I already own?

If you acquired an investment property before 7:30pm AEST on 12 May 2026, the new negative-gearing restrictions will not apply to that property.

This means the existing negative-gearing treatment will continue to apply to those properties.

This is an important grandfathering provision for existing investors.

Capital Gains Tax changes

The Government is also changing the way capital gains are taxed from 1 July 2027.

Currently, individuals and trusts that hold an eligible asset for more than 12 months can generally access the 50% CGT discount.

From 1 July 2027, the Government will replace the 50% discount with an inflation-based adjustment, together with a minimum 30% tax rate on real capital gains.

The new rules are intended to tax the gain after taking inflation into account.

Importantly, this does NOT mean that all existing properties will suddenly lose their existing CGT treatment.

For assets already owned, the capital gain will be dealt with by reference to when the gain accrued.

Broadly:

Capital growth up to 30 June 2027 → Existing CGT arrangements apply.

Capital growth from 1 July 2027 → New CGT arrangements apply.

This means an existing investment property may have part of its capital gain taxed under the current rules and part under the new rules when it is eventually sold.

The precise calculation will depend on the asset, acquisition date, sale date and the applicable transitional rules.

What about new builds?

There is an important exception for investors purchasing new residential property.

Investors who purchase eligible new builds can choose between:

• The existing 50% CGT discount; or

• The new inflation-based CGT arrangements and minimum tax rules.

New residential builds will also continue to have access to negative gearing under the new rules.

What does this mean for property investors?

The changes mean that the timing and type of property investment may become increasingly important from a tax perspective.

Before purchasing an investment property, it is worth considering:

✔ Is the property an established property or a new build?

✔ When will the property be purchased?

✔ Will the property generate a tax loss?

✔ How will that loss be treated under the new rules?

✔ How long do you expect to hold the property?

✔ What are the potential capital gains tax consequences when you eventually sell?

✔ Are you purchasing personally, through a company or through a trust?

✔ How will the investment fit into your overall cash-flow and tax position?

Tax should be one part of the investment decision, rather than the only reason for purchasing a property.

Key dates to remember

DateWhat it means12 May 2026 – 7:30pm AESTExisting residential investments acquired before this time are protected from the new negative-gearing restrictions1 July 2027New negative-gearing and CGT arrangements commence1 July 2027 onwardsCapital growth accruing from this date is subject to the new CGT frameworkNew buildsContinue to receive special treatment under the new rules

Thinking about buying or selling an investment property?

These changes make it particularly important to consider the tax consequences before signing a contract.

At Trilogy Accountants, we can help you understand how the proposed/current rules may affect your individual circumstances, including:

• Investment property tax planning

• Negative gearing

• Capital gains tax calculations

• Property ownership structures

• Trust and company structures

• Property sale and CGT planning

Every investor's circumstances are different, so there is no one-size-fits-all answer.

If you're considering buying, selling or restructuring an investment property, speak with us today so we can help you get it right!

Disclaimer: This article provides information only and should not be relied upon as personal financial or tax advice. The legislation and transitional arrangements may be subject to further amendments. We recommend obtaining advice based on your individual circumstances before entering into an investment or property transaction.

From 1 July 2026, Trilogy Accountants Pty Ltd has a legal obligation to verify the identity of our clients before we can provide certain services. This applies to new and existing clients alike.

These requirements are administered by AUSTRAC, Australia’s Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) regulator. These measures are designed to safeguard accounting and advisory services from being exploited, whether deliberately or inadvertently, to facilitate money laundering, terrorism, and organised crime.

What we’ll ask for

Before certain services can begin, we are legally required to verify your identity.

What we need depends on the nature of the service. For individuals, this typically means proof of ID, such as driver's licence or passport.

For companies, trusts, and other entities, we may also need to identify directors, shareholders, and beneficial owners.

Verification requirements can evolve along with your service requirements. Occasionally, we may need to request extra details about where your transaction funds come from or how they will be used.

How we’ll do it

We conduct identity verification through Instant Compliance, a purpose-built AML platform used by other Accounting, legal and Financial service firms.

If digital verification doesn’t work for you, please contact us to discuss alternative options.

Your privacy

Any information you provide is collected securely, used only to meet our regulatory obligations and deliver the services you’ve requested, and handled in line with applicable privacy laws. It is not used for any other purpose.

What this means in practice

For most clients, this will mean a short verification step before an engagement begins – and occasionally during it. Our team will let you know when verification is needed, what to expect and how to complete it.

Due to updated professional regulations, accounting firms now follow the same thorough identity and compliance checks as banks and insurers. We will guide you smoothly through any updated requirements