Australia’s negative gearing rules are changing.
From the 2027-28 income year, certain residential property losses may no longer be deductible against salary, wages, business income or other unrelated income.
We have prepared a detailed report explaining the new loss quarantining rules, the key carve-outs, and what property investors, accountants and advisers should consider before acquiring, holding or restructuring residential property.
Our report, Quarantined: The New Negative Gearing Rules Explained, provides an explanation of Australia’s new negative gearing rules and their practical effect for residential property investors, trusts, family groups and advisers.
The report explains how the new loss quarantining regime works, which entities and properties may be excluded, how pre-12 May 2026 acquisitions are treated, and how quarantined losses may be carried forward or applied against relevant residential property gains.
Negative gearing generally occurs where the deductible costs of holding an income-producing investment exceed the income generated from that investment.
For residential property investors, this commonly arises where rental income is less than expenses such as interest, strata levies, council rates, repairs, insurance and property management fees.
The new rules are contained in section 26-155 of the Income Tax Assessment Act 1997 (Cth). Broadly, certain excess deductions relating to residential dwellings used or held as residential accommodation may be quarantined. This means the excess may not be available to reduce unrelated income in the same income year.
Instead, the quarantined amount may be carried forward or used in accordance with the new rules.
Our report provides a practical explanation of the new negative gearing regime, including:
This report may be useful for:
The new negative gearing rules may affect the after-tax cost of holding residential property.
For affected taxpayers, the key issue is that residential property losses may no longer be immediately available to offset unrelated income. This may change the commercial assumptions behind property acquisitions, investment cash flow modelling, ownership structures and longer-term tax planning.
The rules are also technical. Their application may depend on matters such as:
For that reason, property investors and advisers should consider the rules before making decisions about acquisition, ownership, refinancing, restructuring or disposal.
The new negative gearing rules may affect the after-tax cost of holding residential property. Advice ensures you understand whether the rules apply, preserve available carve-outs, avoid unexpected tax consequences and protect your long-term property wealth.
We explain whether your residential property losses may be quarantined, carried forward or applied against future residential property income or gains.
We identify whether your property may fall within an available carve-out, including pre-12 May 2026 acquisitions, new residential dwellings or other excluded categories.
We advise on how the rules may apply across individuals, companies, trusts, SMSFs and family group structures, so your ownership structure aligns with your commercial and tax objectives.
We help ensure your tax position is clear, supportable and properly documented, reducing the risk of unexpected ATO scrutiny or future disputes.
Protect your property wealth
Whether you’re buying an investment property, restructuring a family group or reviewing an existing portfolio, we help you minimise tax risk, protect assets and make informed decisions before the rules affect your position.
When new tax rules affect the way residential property losses are used, you need advice that is precise, practical and commercially focused.
We advise on the tax and legal issues that arise when residential property, trusts, companies and family wealth structures intersect.
We do not look at negative gearing in isolation. We consider ownership structure, asset protection and long-term commercial objectives.
We explain the new negative gearing rules so you understand if losses can be quarantined, carried forward or preserved.
We scope issues upfront, keep advice focused and offer fixed fees wherever possible, so you know exactly where you stand.
