From 2027, the Only Negatively Gearable Home Is a New Build. Here Is How to Get One

Part of Property market news and commentary

Here is a question the 2026 budget quietly answered for you. If the tax system is about to favour one kind of property over every other, how do you actually end up owning that kind, especially if you have never built anything in your life?

From 1 July 2027, a new build is the only residential property in Australia that keeps full negative gearing and a capital gains tax election. I have covered the negative gearing rules and the capital gains tax changes in their own pieces. This one is about the part that follows: now that new supply is the favoured asset, how does an ordinary investor get a slice of it without quitting their job to become a developer.

The shift, in one line

The tax code has stopped rewarding you for buying the established house next door and started rewarding you for adding a home that was not there before.

That is not my opinion, it is the design of the reform, and the industry has read it the same way. Place Estate Agents chief executive Damian Hackett told Domain the changes are likely to “shift future investor demand toward new housing and apartment supply”. Fair minds disagree on how big the effect will be, and it is worth reading the sceptics too. But for someone with capital to place in the next few years, the direction is not really in doubt.

Four ways money gets into a new build

There is a common assumption that to benefit from a development you have to run one. You do not. Money gets into new supply four different ways, and only one of them makes you the developer.

Path	What you are	Where the return comes from
Buy a completed new home and hold	Owner	Rent and long-run growth, with the new-build tax treatment
Buy at developer cost price	Owner	The developer margin kept as built-in equity and stronger yield
Co-develop (capital into the build)	Owner	The growth the build itself creates, not the market cycle
Lend to a project	Financier	Interest, secured, no ownership upside

The first three make you an owner, which is the side that carries the new-build tax treatment. The fourth makes you a lender, which is a genuinely different thing, and worth being clear-eyed about.

Are you an owner, or a lender?

This is the distinction that matters most when something goes wrong, so it is worth slowing down on.

A lender is first in the queue to be repaid and last to share in the upside, which usually means there is no upside beyond the interest. An owner is last in the queue if the project struggles and first to benefit if it does well. Neither is better in the abstract. They are different trades. The mistake is buying one while thinking you bought the other, which is exactly what happens when a page says “invest with us” and never tells you which side of the line you are standing on.

Simply put, decide whether you want the safety and ceiling of lending, or the risk and upside of owning, before you look at a single return figure.

The structures, named

Here is the bit that separates a credible arrangement from a worrying one. The structure gets named.

Co-development capital can be held a few honest ways: as units in a unit trust, under a joint venture deed, or as a share on title as tenants in common. That last one is worth understanding, because it is direct property ownership, your name on the title for your share, not a unit in a managed fund and not a financial product. It is ownership, held directly.

If an operator will not tell you which of these you are entering, that vagueness is the risk. Naming the structure is not a technicality, it is how you know whether you own an asset or a promise. We think naming it plainly is the least an investor should expect, which is why the co-development model is built on a share on title rather than a pool.

Why nobody honest says “fixed”

You will see “12 per cent fixed” and “guaranteed returns” around this part of the market. Please be careful with that language.

A development return depends on the build coming in on budget and the finished homes selling or valuing where you expect. Those are real risks, so an honest operator talks about a target return, shows you the feasibility behind it, and tells you what happens if the project misses its margin. “Fixed” and “guaranteed” on something that is neither is not a comfort, it is a warning sign. The absence of those words, paired with a feasibility you can actually read, is what confidence looks like here.

Check before you commit

Whatever path you choose, do the boring checks first, because the boring checks are the ones that save people. Look the developer up on ASIC Connect and the ABN Lookup, check any builder licence, and ask to see finished projects with real addresses and dates. Understand where your money sits during the build. The regulator’s Check before you invest guidance is a sensible starting point, and a developer worth backing will hand you the answers rather than dodge the questions.

Where this leaves you

From 2027 the tax settings and the national housing shortfall point the same way, at new supply. The four paths above are simply the ways an everyday investor gets on the right side of that. If you want the growth the build creates without running the project, that is what co-development capital growth is for. If you would rather hold a finished home with the margin already in it, that is buying at developer cost price. Either way, the whole property development process is laid out in the guide, and you can run your own numbers in the Manufactured Equity Calculator before you talk to anyone.

The window that makes this urgent is the run-up to 1 July 2027, while the new-build advantage is fresh and the supply is still being built. That is exactly the gap our work is built to close, and it is a good time to understand it properly.

General information only. Nothing here is financial, credit or tax advice, nor an offer of any financial product. Any investment carries risk, including the loss of capital, and past results are not a promise of future performance. Speak with your own licensed adviser before acting.