Negative gearing: don’t let the headlines confuse your 2026 tax return
By Tina Zawila
If you own a rental property, you may have seen plenty of headlines about negative gearing changes. Those changes have now been legislated, but for anyone preparing their 2026 tax return, the first thing to know is this: the current rules still apply.
This follows the same message from my recent Tax Time article — Budget announcements can be useful, but they do not always affect the return you are lodging now. For the 2025–26 financial year, landlords should continue to claim legitimate rental deductions in the usual way, provided the property was genuinely available for rent and the expenses can be properly substantiated.
So, what is changing? The new law is aimed at certain established residential properties acquired after 7:30pm AEST on 12 May 2026. From 1 July2027, losses from those affected properties will no longer be able to be immediately offset against salary, business income or other non-rental income. Instead, those losses will be quarantined.
That may sound alarming, but quarantined does not mean gone. Under the new rules, those losses can be carried forward and used against future residential rental income, or against gains made when a residential property is eventually sold. Properties acquired before Budget night are not expected to be caught by these new quarantining rules, even if they are rented out later.
There is also different treatment for new residential dwellings, reflecting the Government’s focus on encouraging additional housing supply. As always, the detail matters. Before buying, selling or restructuring, check when your property was acquired, keep good records and seek advice specific to your circumstances. Negative gearing rules are changing from 1 July 2027, but your 2026 tax return still needs to be prepared under the law as it stands today.
These articles are general in nature. If you are a rental property investor and need professional advice, contact the team at UHY Haines Norton CQ on 4972 1300 for advice tailored to your circumstances.
