The 7:30pm AEST, 12 May 2026 cutoff
Am I grandfathered? Three questions, straight answer.
Which negative gearing rules apply to your property comes down to when you contracted and what you bought. Check it in ten seconds.
Your purchase
Based on the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Royal Assent 26 June 2026 (ATO source). General information only - eligibility details, especially new-build status and ownership changes, warrant advice.
Why one evening in May divides every investor in the country
The 2026 federal budget drew a single line through the residential investment market: 7:30pm AEST, 12 May 2026 - the moment the negative gearing changes were announced. The measures are now law (Royal Assent 26 June 2026). Contracts entered before the cutoff keep negative gearing as investors have used it for decades. Contracts after it fall into two camps: eligible new builds, deliberately exempt to encourage supply, and everything else, whose losses are quarantined from 1 July 2027. The CGT side is different - the shift from the 50% discount to CPI indexation plus a 30% minimum tax applies to gains accruing from 1 July 2027 for everyone, grandfathered or not.
The traps are at the edges. It's the contract date, not settlement - a pre-cutoff contract settling in 2027 is still grandfathered. Status doesn't survive a change of owner - moving a property into a trust after the cutoff is a new acquisition under the new rules. And "new build" has a precise meaning that a heavy renovation doesn't meet. If you're in the quarantined camp, the practical question is what it costs you - the negative gearing calculator shows the year-by-year loss pool, and New Build vs Established prices the alternative.
Frequently asked questions
What does "grandfathered" mean for negative gearing?
If you entered the contract to buy a residential investment property before 7:30pm AEST on 12 May 2026, the property is exempt from the negative gearing changes for as long as you hold it: rental losses keep deducting against your salary and other income at your marginal rate. The date that matters is the contract date, not settlement - the law deems your ownership to start when you enter the contract. Grandfathering covers negative gearing only; the separate CGT changes apply to everyone.
Do grandfathered properties keep the 50% CGT discount?
Only for the gain accrued to 1 July 2027. The law deems every pre-held asset sold and re-acquired at that date: the gain to 1 July 2027 is banked and still gets the 50% discount when you eventually sell, while the gain accruing after that date uses CPI indexation plus a 30% minimum tax rate instead. That part applies to all CGT assets and all owners - grandfathering does not opt you out of it.
I contracted after 12 May 2026 - what happens to my deductions?
If the property is an established dwelling, your rental losses still deduct normally for the financial year ending 30 June 2027, and are then quarantined: from 1 July 2027 they only offset residential rental income across your portfolio, with unused losses carried forward indefinitely and usable against a residential capital gain at sale. If the property is an eligible new build, you keep full negative gearing - and the 50% CGT discount, or the new indexation treatment if you choose it.
What counts as an eligible new build?
Broadly, a dwelling that genuinely adds to housing supply and has never previously been sold as residential premises - newly built homes, off-the-plan purchases, and knock-down rebuilds only where more dwellings replace fewer. Renovations and one-for-one rebuilds do not qualify, and the status belongs to the first owner only - buy an ex-new-build second-hand and it is established in your hands. The precise eligibility rules sit in a ministerial determination that had not been made as at August 2026, so confirm with your adviser.
Does refinancing, moving in, or transferring ownership affect grandfathered status?
Refinancing does not - status follows the property acquisition, not the loan. But a change of ownership is a new acquisition: transfer a grandfathered property to your spouse, a trust or a company after the cutoff and the new owner is under the new rules on the plain reading of the law. The government has announced temporary rollover relief for some restructures but it is not yet legislated. Living in it and later re-renting it does not un-grandfather it.