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From the 2027-28 income year, net rental losses on an established dwelling bought at or after 7:30pm AEST on 12 May 2026 can only offset residential rental income or residential capital gains, not your wages. Three questions tell you whether that applies to you.
This result applies to individuals and ordinary investment structures. A widely held unit trust, a complying superannuation entity, amounts relating to fringe benefits and certain determined purposes are treated differently. If any of these may apply, check your position with a registered tax agent.
Negative gearing changes for some investors from the 2027-28 income year — what changes
Rent minus interest, expenses and depreciation. Leave as-is for a rough illustration
This is an established dwelling contracted at or after 7:30pm AEST on 12 May 2026. From the 2027-28 income year, a net rental loss on it can only offset residential rental income or a residential capital gain, not your wages.
Illustrative effect on this property alone
Today, a $10,000 loss at 32% saves about $3,200 in tax the same year. It still does this year, because Schedule 2 applies the quarantine to the 2027-28 income year and later. From then none of it offsets your wages: it carries forward, unused, until you have residential rental income or a residential capital gain to use it against.
Quarantined losses pool with your other residential properties per taxpayer, not per property (s26-155(1)). The full Negative Gearing Calculator models that pooling.
This result applies to individuals and ordinary investment structures. A widely held unit trust, a complying superannuation entity, amounts relating to fringe benefits and certain determined purposes are treated differently. If any of these may apply, check your position with a registered tax agent.
This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.
From the 2027-28 income year, a net rental loss on an established residential dwelling contracted at or after 7:30pm AEST on 12 May 2026 is "quarantined": it can only offset residential rental income or a residential capital gain, not wages or other income.
Anything owned before that moment keeps full negative gearing, and so do new residential dwellings. The reform targets established-stock purchases going forward, not existing investors or new supply.
"New residential dwelling" is still not defined in law; the proposed test is in the FAQ below: What if I buy a new residential dwelling at or after the cutoff?
It depends on when you contracted to buy, not on whether you own it now. An established dwelling you contracted at or after 7:30pm AEST on 12 May 2026 is caught from the 2027-28 income year even though you already own it. Anything contracted before that moment is grandfathered and keeps full negative gearing indefinitely, regardless of when you eventually sell it.
No. Once quarantined, a loss can only offset residential rental income or a residential capital gain, never wages or other income, for as long as it's carried forward.
New residential dwellings are grandfathered regardless of contract date. The quarantine specifically targets established (previously-occupied) dwellings. "New residential dwelling" is still not defined in law, so this result rests on your own characterisation. There is now a proposed test though. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 (introduced on 14 October 2026, passed by the House of Representatives on 29 October 2026, yet to pass the Senate) would put the definition into primary legislation (proposed s960-590) rather than the s26-160(4) Ministerial instrument the Act contemplated. As introduced, every route requires the dwelling's certificate of occupancy to have been first issued at or after 7.30 pm (ACT legal time) on 12 May 2026, and for an extra dwelling or a conversion also at or after the time you acquired the land (proposed s960-590(1)(e)-(4)(e)). Every route also requires your interest in the dwelling to be a legal interest capable of being acquired by another entity, and for an extra dwelling added to a parcel, or one of several dwellings in a converted building, capable of being acquired independently of the other dwellings, so a second dwelling that cannot be sold separately, such as a granny flat on the same title, would not count (proposed s960-590(1)(d), (2)(d), (3)(d) and (4)(b)). Within that, a dwelling built on land you bought without one, an extra dwelling added to a parcel and a building converted into dwellings have no 24-month limit (proposed s960-590(1)-(3)). The 24 months applies only where you bought the dwelling from another owner, typically the developer, for whom it was new: you must acquire it no more than 24 months after its first certificate of occupancy (proposed s960-590(4)). A transitional rule extends that to a dwelling first certified before the cutoff, bought within 24 months of that certificate from a seller who owned it before the cutoff and has held it for sale ever since. No route applies where it is reasonable to conclude the dwelling came out of a scheme with a principal purpose of getting the tax benefit of treating it as new (proposed s960-590(5)). Treasury's exposure draft (released 4 August 2026, consultation closed 21 August 2026) had set that window at 24 months, extended from the 12 months in the Budget. Nothing is enacted yet: the Bill is a proposal, not law, so treat its test as a signal rather than a rule, and if your dwelling sits outside it take advice before relying on the exemption.
Yes. The quarantine changes what income a net loss can offset, not what counts as a deductible expense. Depreciation, interest, rates and other costs are still deductible against the property's own rental income and any other residential rental income.
Estimates only. Not financial or tax advice. Full disclaimer for your rights and our limitations of liability.
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What can move this result
This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.