Does the quarantine apply to properties I already own?

No. Anything contracted before 7:30pm AEST on 12 May 2026 is grandfathered and keeps full negative gearing indefinitely, regardless of when you eventually sell it.

Can a quarantined loss ever offset my salary?

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.

What if I buy a new residential dwelling after the cutoff?

New residential dwellings are grandfathered regardless of contract date — the quarantine specifically targets established (previously-occupied) dwellings. The exact legal definition of "new" is still pending a Ministerial instrument.

Is depreciation still deductible on a quarantined property?

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.

Am I Grandfathered? Negative Gearing Changes 2027

From 1 July 2027, net rental losses on an established dwelling bought 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.

Negative gearing changes for some investors from 1 July 2027 — what changes

Your Property

Contract (purchase) date

Dwelling type

Estimated annual rental loss

Rent minus interest, expenses and depreciation — leave as-is for a rough illustration

Marginal tax rate

Quarantined from 1 July 2027

This is an established dwelling contracted after 7:30pm AEST on 12 May 2026. From 1 July 2027, 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 34.5% saves about $3,450 in tax the same year. Quarantined, none of that offsets your wages this year — 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.

How to Use This Calculator

1Enter the contract (purchase) date for the property
2Select whether it's an established dwelling or a new residential dwelling
3Optionally enter your estimated annual rental loss and marginal tax rate for an illustration
4See whether the negative gearing quarantine applies from 1 July 2027

What Is the Negative Gearing Quarantine?

From 1 July 2027, a net rental loss on an established residential dwelling contracted 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.

What legally counts as a "new residential dwelling" is not yet defined — a Ministerial legislative instrument is still pending. Expected criteria (from explanatory material, not yet law) include genuinely adding to supply, bought from the builder, and not previously occupied for more than 12 months.

Key Factors

The cutoff moment: 7:30pm AEST on 12 May 2026 — a specific time, not just a date. A contract signed that day needs its exact execution time checked.
Quarantined, not lost: A quarantined loss isn't forfeited — it carries forward and offsets residential rental income or a residential capital gain whenever you have one.
Pooled per taxpayer: If you own more than one residential rental property, quarantined losses pool together — not tracked separately per property.
"New" is undefined: The legal test for a new residential dwelling doesn't exist yet. Treat any new-build election as provisional until the instrument is made.

What This Means Practically

•If you're mid-way through buying an established property, the contract date — not settlement — is what the cutoff looks at
•A quarantined loss is most useful if you hold, or plan to hold, other residential rental property with positive income to absorb it
•This is general information about how the law works, not advice about whether to buy, hold or sell any property

Frequently Asked Questions