What Do the Negative Gearing and Capital Gains Tax Changes Mean for Northern Beaches Property Owners?

The negative gearing and capital gains tax changes passed the Senate on Thursday 25 June 2026 and are now law, but the main changes do not start until 1 July 2027 and they largely protect what people already own. If you owned, or had signed a contract to buy, a residential investment before 7:30pm on Tuesday 12 May 2026, you can keep negatively gearing it. From 1 July 2027, negative gearing on residential property is limited to new builds, and the 50 per cent capital gains tax discount is replaced for gains made after that date. Your own home remains exempt from capital gains tax.

The Key Dates

• 7:30pm, Tuesday 12 May 2026. Federal Budget night, and the grandfathering cut-off for negative gearing.
• Thursday 25 June 2026. The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed the Senate. The ATO now lists the measures as law.
• 10 August 2026. New limits on self-managed super funds borrowing to buy property took effect.
• 1 July 2027. The negative gearing and capital gains tax changes start.

Negative Gearing: Who Is Grandfathered and What Changes

Negative gearing lets an investor deduct a rental loss against other income, such as salary. Under the new law, residential properties held at 7:30pm on Tuesday 12 May 2026 can keep being negatively geared until they are sold. That includes a contract signed before the cut-off but not yet settled.

For an established home bought after the cut-off, the treatment changes. It can be negatively geared until 30 June 2027, but from 1 July 2027 any rental loss can only be offset against other residential rental income or residential capital gains, and is carried forward rather than reducing your salary income. New builds are the exception: investors who buy a genuinely new dwelling keep full negative gearing.

Capital Gains Tax: What Changes From 1 July 2027

For individuals, trusts and partnerships, the 50 per cent CGT discount is replaced by indexation of the cost base for inflation, together with a minimum tax rate of 30 per cent on capital gains. These rules only apply to gains that accrue from 1 July 2027. Gains made before that date stay under the old rules, including the 50 per cent discount.

To split the two periods, owners will need the property's value at 1 July 2027. The government has said taxpayers can either obtain a valuation as at that date or use an apportionment formula, with ATO tools to follow. Assets bought before 20 September 1985, which have been outside CGT, keep their exemption for gains up to 1 July 2027 but lose it for gains after that date.

Self-Managed Super Funds and Commercial Property

From 10 August 2026, a self-managed super fund that enters a new limited recourse borrowing arrangement can only use it to buy business real property, not residential property. The ATO confirms that arrangements already in place, refinancing of those arrangements, and contracts exchanged before 10 August 2026 are unaffected.

Commercial property sits outside the negative gearing change, which applies to residential property only. The capital gains tax change, however, applies to commercial property as well, so owners of shops, offices and industrial units in Brookvale, Mona Vale or Warriewood should not assume they are untouched.

What It Means for You

• Existing investors. If you held your property before the Budget night cut-off, your negative gearing position does not change. Your capital gain will be split into a before and after 1 July 2027 portion when you eventually sell.
• About to buy an investment. An established home in Dee Why or Collaroy is now treated differently from a new apartment in Frenchs Forest or Brookvale. Have your accountant model both before you commit.
• Owner-occupiers. The government's Budget tax explainer confirms the main residence continues to be exempt from CGT. Selling the home you live in is not affected by these changes.
• Buyers watching the competition. Treasury modelling projects around 75,000 additional owner-occupiers over the next decade as some purchases shift from investors to people buying a home to live in. How that plays out in any one suburb is not something anyone can know yet.

What Is Still to Come

This is the first tranche. The government has described a new build broadly as a home that adds to supply, such as a dwelling built on vacant land or a site where one house is replaced with several. The detailed legal definition of a new residential dwelling is part of a second tranche still to come. Treasury's consultation closed on Friday 21 August 2026. Until it is settled, take particular care with any purchase that depends on being classed as a new build.

Get Advice on Your Own Position

This article explains the law in general terms and is not tax or financial advice. Everyone's situation is different, so please speak to your accountant or a registered tax agent about your own position before you buy, sell or restructure anything.

How The North Agency Can Help

We cannot advise on tax, but we can give you an accurate, current read on what your property is worth and how buyers are responding, which is useful information to take into a conversation with your accountant. Our residential, commercial and property management teams work across Dee Why, Mona Vale and Frenchs Forest, and we are happy to talk it through.

Frequently Asked Questions

Can I still negatively gear my Northern Beaches investment property?

Yes, if you owned it or had signed a contract to buy it before 7:30pm on Tuesday 12 May 2026. Those properties can be negatively geared until they are sold. Established homes bought after that time lose full negative gearing from 1 July 2027.

When do the negative gearing and CGT changes start?

The law passed the Senate on Thursday 25 June 2026, but the negative gearing and capital gains tax changes apply from 1 July 2027. The separate limit on self-managed super funds borrowing for residential property applied from 10 August 2026.

Is the 50 per cent CGT discount gone?

Not for gains made before 1 July 2027, which keep the old rules. For gains accruing from that date, individuals, trusts and partnerships use cost base indexation for inflation and a 30 per cent minimum tax rate instead.

Do the changes affect the sale of my own home?

The government's Budget tax explainer states the main residence will continue to be exempt from capital gains tax. If your home has also been rented out at some point, ask your accountant how the rules apply to you.

Does the negative gearing change apply to commercial property?

No. The negative gearing change applies to residential property only. The capital gains tax change does apply to commercial property, so commercial owners should still understand how a future sale will be taxed.

Should I sell my investment property before 1 July 2027?

That depends entirely on your own circumstances, and it is a question for your accountant or a registered tax agent. Gains made before 1 July 2027 keep the old rules whenever you sell, so there is no single date that suits everyone.