Why new builds are the only negatively-geared play from 1 July 2027

On 12 May 2026 the Albanese Government announced what may be the most consequential change to Australian property taxation in three decades. From 1 July 2027, negative gearing for residential property will apply to new builds only. Existing investments made before 7:30pm AEST 12 May 2026 are grandfathered.

On its own that sentence reshapes a decade of investor behaviour. Read alongside the parallel CGT change — the 50% discount replaced with inflation-indexed gains and a 30% minimum rate, again with a carve-out for new homes — and it is unambiguous: the Government is funnelling investor capital toward newly-constructed housing supply.

If you buy an established dwelling after 1 July 2027 and run it at a loss, that loss is no longer offsettable against your other income. Your cost base is also no longer eligible for the 50% CGT discount on realised gains.

If you buy a new build, both of those positions are preserved. The investor cash-flow profile that has been baked into Australian property since 1985 only continues to exist for one asset class.

Three things, all at once. First, completing existing-stock acquisitions before 7:30pm 12 May 2026 to lock grandfathered status. Second, building a transition runway of new-build settlements between now and 1 July 2027. Third, restructuring portfolios to retire underperforming established stock and recycle into Budget-compliant assets.

Hera's due diligence framework was built for exactly this terrain. Our AI-driven corridor analysis was trained on the supply-side data the Treasury used to model the policy. Our preferred-builder panel is already over-indexed to the assets the Government wants supplied.