Updated 10 October 2026
Yes. Residential property acquired before 7:30pm AEST on 12 May 2026 keeps full negative gearing for as long as you own it. The CGT discount is also grandfathered, but by a different test: the gain accrued up to 1 July 2027. The second test is the one that depends on a market value.
At a glance
- Property acquired before 7:30pm AEST on 12 May 2026 keeps full negative gearing.
- Established residential property acquired after that time has its rental losses quarantined from 1 July 2027.
- The 50 per cent CGT discount is preserved for gains accrued to the end of 30 June 2027, whenever the property was bought.
- The two tests are separate, so a property can pass one and not the other.
- The negative gearing test needs a contract date. The CGT test needs a market value.
In this guide
What grandfathered means here
Grandfathering means an existing arrangement keeps its old treatment after the rules change. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 does this twice, in two different ways, and most confusion comes from treating them as one.
| Negative gearing | CGT discount | |
|---|---|---|
| What is protected | The right to deduct rental losses against other income | The 50 per cent discount on growth already accrued |
| The test | When the property was acquired | How much of the gain accrued by the end of 30 June 2027 |
| The date | 7:30pm AEST on 12 May 2026 | 1 July 2027 |
| Evidence | The purchase contract | A market value at the reset date |
| Who it covers | Residential property investors | Individuals, trusts and partnerships holding any affected CGT asset |
The negative gearing test
The question is when you acquired the property. If that was before 7:30pm AEST on 12 May 2026, nothing changes: rental losses stay deductible against wages and other income for as long as you own it. The ATO's overview confirms that property held at the announcement time is exempt.
The protection attaches to your ownership, not to the property. A buyer who acquires the same established dwelling from you after the cut-off is caught. New residential dwellings are exempt regardless of the date. The mechanics, including how quarantined losses carry forward, are in negative gearing changes explained.
The CGT discount test
The question here is how much of your gain had accrued by the end of 30 June 2027. Every affected asset is treated as sold and reacquired at that moment. Growth up to it keeps the 50 per cent discount whenever you sell. Growth after it is indexed for inflation and taxed at a minimum of 30 per cent.
There is no purchase-date cut-off in this test. A property bought in 2005 and a property bought in June 2026 are both split at the same date. What differs is how much gain sits on each side, and that is decided by the value at the reset date, set by a market valuation or by Treasury's apportioning formula. The detail is in CGT discount changes from 1 July 2027 and on the 1 July 2027 valuation page.
Properties caught by one test and not the other
- Bought in 2015, still held in 2030. Negative gearing is fully grandfathered. The CGT gain is still split at 1 July 2027, so the reset value matters.
- Established house bought in August 2026. Losses are quarantined from 1 July 2027. The gain to 30 June 2027 still keeps the discount, though that slice is small.
- New build bought in 2026. Negative gearing continues, and the owner can choose the discount at sale.
- Home bought in 2018 and first rented in 2028. Draft legislation released in August 2026 would treat the home as acquired in 2018 for negative gearing, so losses stay deductible. For CGT, the cost base resets to market value on the day it first earned income.
The last case needs a value at a past date if it was not obtained at the time, which is what a retrospective property valuation provides. The draft, part of the Tax Reform No. 3 Bill, had not been introduced when this post was published.
The second test needs a number
The CGT discount is preserved up to the value at the end of 30 June 2027. A valuation fixes it. Residential $297, commercial $595, AUD inc. GST, 24 to 48 hours.
Start your orderHow it worksEvidence to keep
- For negative gearing: the purchase contract showing the contract date, and for a new build the certificate of occupancy.
- For the CGT discount: the purchase and sale contracts, records of improvements, and the value at the end of 30 June 2027.
Warning
The second test does not prove itselfA contract date is a fact on a document. A market value at 30 June 2027 has to be established, by a valuation supported by documented comparable sales evidence or by the formula. The evidence for a valuation is easiest to assemble close to the date.
Our 1 July 2027 CGT calculator shows what the choice between valuation and formula is worth, and the reform as a whole is on CGT changes in Australia.
Common questions
Is negative gearing grandfathered?
Yes. Residential property acquired before 7:30pm AEST on 12 May 2026 keeps full negative gearing for as long as the same owner holds it. Established residential property acquired after that time has its net rental losses quarantined from 1 July 2027.
Will negative gearing be grandfathered if I sell and buy again?
No. The protection attaches to the property you held at the cut-off. An established dwelling bought after 7:30pm AEST on 12 May 2026 is caught, even if it replaces a grandfathered one. A new residential dwelling is exempt whenever it is bought.
Is the CGT discount grandfathered too?
In effect, yes, for growth already accrued. Gains up to the end of 30 June 2027 keep the 50 per cent discount whenever the asset is sold. Gains after that date are indexed and taxed at a minimum of 30 per cent. The split depends on the value at the reset date.
Does a grandfathered property still need a 1 July 2027 value?
Yes. Negative gearing grandfathering does not affect the CGT split. Every affected property held across 1 July 2027 has its gain divided at the value on that date, set by a market valuation or by Treasury's apportioning formula. That holds even where the purchase date protects the rental deductions.
