Negative Gearing Changes: What Australian Property Investors Need to Know

Changes to Australia’s negative gearing rules have now been enacted, including important exemptions for certain property ownership transfers.

The revised rules apply to individuals who acquire an ownership interest in a residential property in certain circumstances, including:

• Transfer from a deceased spouse — where the deceased spouse’s interest was exempt from the negative gearing loss-quarantining rules.

• Transfer following the death of another joint owner — where an existing owner acquires an additional interest as a surviving joint tenant or as a beneficiary of the deceased estate.

• Transfer following a relationship breakdown — where an individual acquires an interest in a residential property from their former spouse and the spouse’s interest was exempt from the loss-quarantining rules.

When do the changes apply?

The amendments apply to net rental losses incurred from the 2027–28 income year onwards for interests in residential dwellings acquired on or after 7:30 pm on 12 May 2026, subject to the specific exclusions and transitional rules.

What does this mean for property investors?

If you own an investment property, are considering purchasing residential property, or are dealing with an inheritance, deceased estate or relationship breakdown, these changes may affect how rental losses are treated for tax purposes.

Negative gearing and rental property tax rules can be complex, particularly when ownership changes.

At Gavin Ma & Co, we assist Australian property investors and families with:

✓ Negative gearing and rental property tax
✓ Property investment tax planning
✓ Capital gains tax (CGT)
✓ Deceased estates and property transfers
✓ Family and investment structures
✓ Tax returns and ongoing tax compliance

If you are acquiring or transferring an interest in residential property, speak with your accountant before making the transaction to understand the potential tax consequences.

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