The decision the reform created
New Build vs Established - price the difference
Same property, same price, same rent - audited under both post-May-2026 tax regimes. The gap below is what the quarantine rules cost this exact deal, holding everything else equal.
The deal
The reform premium on this deal
$264/wk
Extra after-tax holding cost of buying established rather than new build from FY27-28 (once losses are quarantined) - and +$26,801 in total position over the 10-year hold including sale and CGT, under these assumptions.
Established (post-reform)
- After-tax cost, year 1
- −$364/wk
- After-tax cost, year 2*
- −$515/wk
- Tax effect over the hold
- +$8,516
- Loss pool at peak
- $183,848
- IRR (incl. sale & CGT)
- 6.38%
- CGT treatment
- Split at 1 Jul 2027*
New build (exempt)
- After-tax cost, year 1
- −$248/wk
- After-tax cost, year 2*
- −$251/wk
- Tax effect over the hold
- +$73,391
- Loss pool at peak
- -
- IRR (incl. sale & CGT)
- 7.91%
- CGT treatment
- 50% discount
*Year 2 = FY27-28, the first fully quarantined year for post-reform established purchases. Gains accruing from 1 Jul 2027 use CPI indexation (2.5%/yr proxy assumption) plus the 30% minimum tax; the earlier slice keeps the 50% discount - confirm with your accountant.
Ten years, side by side
This page compares the two regimes on one property. The audit that runs a full deal under either class is still in build.
Deal Auditor - in build, not yet available
Why one property now has two tax personalities
The May 2026 reform did not abolish negative gearing - it split it by acquisition class. Buy an established dwelling after 7:30pm AEST on 12 May 2026 and, from 1 July 2027, its rental losses stop offsetting your salary: they pool against your other residential rental income and carry forward, with the balance ultimately deductible against a residential capital gain. Its CGT also changes: the gain to 1 July 2027 is banked at the old 50% discount, and later gains are taxed under CPI indexation plus a 30% minimum tax. The same contract signed on an eligible new build keeps the old rules for its first owner - full deductibility at your marginal rate plus the 2% Medicare levy, and the 50% CGT discount on sale (or indexation, if you elect it).
This page isolates that tax gap by holding the deal constant. In reality the two options rarely are constant: new builds often trade at a premium, depreciate faster (Division 40 plant is claimable on new builds but excluded on second-hand purchases), and sit on different land-to-asset ratios. The number here tells you what the regime is worth on your figures; whether a specific property justifies it is a question for the full Deal Auditor with each candidate's real price and rent - and, as always, this is general information, not a recommendation either way.
Frequently asked questions
Why compare new build vs established at all?
Because since 12 May 2026 they are taxed under different regimes. An established dwelling contracted after that date has its rental losses quarantined from 1 July 2027, and its gains accruing after that date are taxed under CPI indexation plus a 30% minimum tax (the gain to 1 July 2027 is banked at the old 50% discount). An eligible first-owner new build keeps full negative gearing and the 50% CGT discount, with the option to choose indexation instead. Two otherwise identical deals can differ by thousands of dollars a year purely on acquisition class.
What counts as an eligible new build?
Broadly, a residential dwelling that has never previously been sold as residential premises and genuinely adds to housing supply - newly constructed homes and off-the-plan apartments, knock-down rebuilds that increase dwelling count, or new construction on vacant land. Substantial renovations of existing dwellings generally do not qualify. Eligibility rules have detail - confirm a specific property with your adviser.
Do new builds always come out ahead?
No - and this tool never says otherwise. New builds typically carry a price premium, higher initial depreciation but sometimes slower land-value growth, and the comparison here holds price and rent equal to isolate the tax effect alone. Whether a specific new build beats a specific established property depends on the deals themselves. Run both through the full Deal Auditor with their real numbers.
What does the reform premium figure mean?
It is the difference in after-tax outcome between buying this property as post-reform established versus as an exempt new build, holding everything else constant - the price the quarantine rules put on this exact deal. It is an estimate under the stated assumptions, not advice.