The reforms announced on 12 May did not abolish property investment or negative gearing overnight. They created dividing lines based on when an established property was acquired, when a capital gain accrued and whether a new dwelling genuinely adds to housing supply.
For investors, those distinctions matter far more than the political language.
Three properties, three different outcomes
The negative gearing changes begin on 1 July 2027, but the first important date was 7.30pm on 12 May 2026.
An established residential property held before that announcement is grandfathered. Its owner can continue deducting eligible rental losses against income such as wages while the property is retained.
An established property acquired after the announcement receives different treatment. Losses can be claimed under the existing rules until 30 June 2027. From the following financial year, excess losses cannot reduce wage income. They may instead be used against residential property income or carried forward.
Genuine new builds occupy a third category. Investors can continue negatively gearing qualifying new housing after July 2027 because the policy is designed to direct tax support towards additional supply.
Capital gains tax follows another timeline. The existing 50 per cent discount applies to eligible gains accruing before 1 July 2027. Gains after that date generally move to cost-base indexation and a minimum 30 per cent tax on real gains. However, qualifying new-build investors can choose between the existing discount and the new method.
This means “grandfathered” does not have one universal meaning. An established property owned before the budget retains its negative gearing treatment, but gains accruing after July 2027 can still fall under the new capital gains regime.
The policy is designed to move money
The government expects these settings to redirect investors from established dwellings towards construction. Treasury modelling estimates the reforms could produce 75,000 additional owner-occupiers over a decade, temporarily reduce price growth by around two percentage points and add less than $2 a week to median rent.
Those are forecasts, not guaranteed results. Investor demand is only one influence on housing. Interest rates, credit policy, construction costs, local supply and population growth will continue shaping prices and rents.
The likely behavioural change is clearer. Established properties with low yields and high holding costs become harder to justify when rental losses can no longer offset salary. New dwellings gain a relative tax advantage, but tax treatment alone cannot turn an unsuitable property into a sound investment.
Jeremy’s result began with replacing the wrong asset
Jeremy Bagdadlian described owning an investment property in Victoria that was not producing sufficient cash flow. He sold it before joining Positive Property and used the released capital to purchase a new property in Beaudesert for $364,000.
The episode reports that the property was renting for $450 a week and had been valued at approximately $565,000 after one year. That valuation is an individual result, not an expected return.
The more useful lesson is that Jeremy did not retain an underperforming property merely because he already owned it. He reconsidered the asset, the cash flow and what his capital could do elsewhere.
That same discipline becomes more important under the new rules. Investors must know which tax category applies, but they must also examine demand, price, rental return and resale appeal.
The war metaphor suggests that every investor faces the same opponent. The legislation says otherwise. Different assets now face different rules, and the investors most exposed are those who fail to understand which side of each dividing line they occupy.
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