Status: Announced · effective 2027-07-01
Negative gearing 1 July 2027 reform — full breakdown
Last reviewed:
Under current law, net rental losses can be deducted against salary, business, or other income in the year they are incurred (no quarantining). From 1 July 2027, the announced reform would:
• Quarantine net rental losses — deductible only against future rental income or capital gains on sale, not against other income in the year incurred.
• Likely include grandfathering or transition provisions for existing investors, with the cut-off rules still under consultation.
• Apply to buy-to-let / residential property investor decisions made in FY 2026-27 that are held into FY 2027-28.
Decision relevance: a property investor running a $15,000 annual rental loss against $120,000 salary income gets roughly $4,500 in tax benefit under current rules. From 1 July 2027 that loss would be quarantined — economically the same loss, but no in-year tax offset. This changes the cash-flow calculus on any new geared purchase.
Citation. Source: [verify Bill name + Act reference once Royal Assent confirmed]. Track ATO updates at ato.gov.au and Treasury consultation papers at treasury.gov.au.
Not tax advice. This is an editorial summary of an announced reform whose precise mechanics, transitional provisions, and effective dates may shift before commencement. Do not rely on this page to plan a transaction — consult a registered tax agent.