Is my investment property grandfathered? Negative gearing after 2027

What's the exact cut-off?

The cut-off is 7:30pm on 12 May 2026, by legal time in the Australian Capital Territory — Australian Eastern Standard Time, as daylight saving had ended. An ownership interest you last acquired before that moment keeps negative gearing for as long as you hold it. A contract signed at 7:30pm exactly, or later, doesn't.

The Act uses Canberra time, so the cut-off fell earlier on the clock elsewhere:

Don't confuse the cut-off with 1 July 2027. The cut-off decides whois affected; 1 July 2027 is when the change starts to bite, from the 2027–28 income year. Losses in 2026–27 are deductible as usual for everyone.

Does contract date or settlement count?

The contract date counts. The Act says that for a home acquired under a contract, you hold the ownership interest from the time you enter into the contract — so a contract signed before 7:30pm AEST on 12 May 2026 is grandfathered even if settlement happened weeks or months later. The settlement date doesn't matter for this test.

This applies to off-the-plan contracts too: one signed before the cut-off is grandfathered, even if the building won't be finished until 2028. The rule is in s 26-155(3) of the Income Tax Assessment Act 1997, inserted by Schedule 2 of the Act.

One trap: the draft new buildtest works the other way. For that test, Treasury's draft says you acquire the home at settlement, so the 24-month window below is measured to the settlement date.

Are new builds and off-the-plan exempt?

New residential dwellings are exempt whenever you buy them, but what counts as “new” isn't final. Treasury's August 2026 draft says a home is new for you if you built it, or you settled within 24 months of its first occupancy certificate — issued at or after the cut-off. Off-the-plan is not automatically exempt.

Under the draft, a home is new for you in one of four cases:

• You built it on land that had no liveable home on it (including a derelict one you demolished).
• You added homes to land you own — for example, subdividing and building a second, separately titled house. Only the added homes are new.
• You converted a non-residential building, such as offices, into homes.
• You bought it within 24 months of its first occupancy certificate, from someone it was new for (usually the developer). This is the case that covers most off-the-plan apartments.

So, under the draft, off-the-plan or “near-new” homes are not new for you if:

• settlement happens more than 24 months after the first occupancy certificate;
• the first occupancy certificate was issued before the cut-off — unless it's a developer's unsold stock, held for sale since before the cut-off (a transitional rule);
• it's a granny flat without its own title, which takes the status of the main house; or
• you knocked down a liveable home and rebuilt just one home on the same block — that doesn't add to supply, so it isn't one of the four cases.

A re-issued certificate after a renovation doesn't restart the clock, and the draft has an anti-avoidance rule for arrangements set up to make an existing home look new.

The same draft would also exempt homes, while they're used this way, that are leased for NDIS specialist disability accommodation, through an eligible community housing provider for affordable housing, to a government agency for public housing, or as part of an active build-to-rent development. The Act allows these exemptions (s 26-155(2)(c)); the list itself is a draft.

What if I inherit or separate?

Under the Act as passed, inheriting a property or receiving it in a separation counts as a fresh acquisition, so an established home can lose grandfathering. Treasury's draft Tax Reform No. 3 Bill would carve out three cases: a surviving spouse, a surviving co-owner, and a court-ordered transfer between separating partners. Those carve-outs are proposed — not yet law.

The proposed carve-outs, from the exposure draft released on 4 August 2026:

• Surviving spouse (proposed s 26-156): a spouse or de facto partner who inherits the deceased's share — as surviving joint tenant or under the will — keeps the deceased's grandfathered or new-build status.
• Surviving co-owner (proposed s 26-157): a co-owner who already held a share, and who inherits another co-owner's share, keeps the status if both bought before the cut-off (or it was new for both).
• Separation (proposed s 26-158): a transfer from a spouse, or from a company or trustee, under a family law court order or binding financial agreement keeps the transferor's status.

The carve-outs only pass on an exemption the previous owner had. If your partner bought after the cut-off, there's nothing to keep. And they don't cover other beneficiaries: a child who inherits an established rental from a parent after the cut-off is affected from 2027–28, under the draft as well as the current law.

Consultation closed on 21 August 2026. The bill still has to be introduced and passed by Parliament, and its wording could change.

What if it used to be my home?

A home you bought before the cut-off and first rent out after it has a quirk. An existing CGT rule (s 118-192) can treat a former home as acquired when it's first rented out, which would fall after the cut-off. Treasury's draft would switch that off for negative gearing, so you keep your original purchase date. That fix is proposed — not yet law.

If you first rented it out before 7:30pm AEST on 12 May 2026, the date it became a rental was also before the cut-off, so this doesn't change your answer.

What if I add someone to the title or refinance?

Refinancing doesn't change who owns the property, so it doesn't affect grandfathering. Adding someone to the title does: the new co-owner acquires their share after the cut-off, so losses on their share are quarantined, while the share you keep stays grandfathered. That reading follows the Act's “last acquired” wording; the ATO hasn't published guidance yet.

• Each owner is tested separately. The exemption attaches to “an ownership interest … you last acquired” before the cut-off (s 26-155(2)(a)). Joint tenants are treated as each owning an equal share (s 108-7).
• Adding a partner isn't covered by the draft carve-outs, which only deal with death and separation.
• Moving the property into a company or trust means the company or trust acquires it after the cut-off, so it's affected — and the transfer is also a CGT event and usually attracts stamp duty.
• Refinancing or redrawing doesn't acquire an ownership interest. Whether the interest is deductible still depends on what the borrowed money is used for, as before.

What happens to losses if I'm not exempt?

From the 2027–28 income year, a net rental loss on a home that isn't exempt can't reduce tax on your salary or other income. It becomes a quarantined amount that offsets residential rental income and residential capital gains, and anything left carries forward with no time limit. Losses in 2026–27 are deductible as usual.

In dollars: a $13,540 yearly rental loss on a $120,000 income (a 32% marginal rate including the Medicare levy) would normally bring back about $4,333 a year at tax time — roughly $361 a month. Quarantined, that refund doesn't arrive; the loss waits until there's residential income or a residential gain to use it against.

• Net profit from your other homes — including grandfathered ones — reduces the quarantined amount first (s 26-155(6)).
• Quarantined expenses can't be added to the property's cost base (s 110-38(8A)).
• Carried-forward amounts are lost on bankruptcy (s 26-155(8)–(9)).

The negative gearing calculator estimates your own cashflow with and without the deduction. For the bigger picture, including the CGT change from 1 July 2027, see negative gearing 2027: what changes.

Do companies, trusts and SMSFs get the same rules?

Companies and family trusts follow the same rules as individuals: the cut-off, the contract date and the new build exemption all apply. Complying super funds (including complying SMSFs) and widely held unit trusts are outside the rule altogether (s 26-155(4)). The proposed inheritance, separation and former-home carve-outs are written for individuals.