Part of The 2027 negative gearing and CGT changes

Do you know what your investment property has actually returned you, after every dollar you have put into it?

Do you know what your negative gearing deduction is worth in dollars, not in principle?

And have you noticed that almost everyone asking whether to sell is asking because of a date, not because of the property?

That last one is the trap. Ahead: what the 2027 change really does to a holding, the three numbers that decide this, why the deadline is the least useful reason to sell, and what the alternatives look like if you decide the property is worth keeping.

I have covered the 2027 negative gearing and CGT changes in full elsewhere. This piece is narrower and more uncomfortable. It is about your property, not the policy.

The change raises the cost of holding, not the quality of the asset

From 1 July 2027, under the Treasury Laws Amendment (Tax Reform No.1) Bill 2026, negative gearing is limited to new builds. If you hold an established property that runs at a loss, that loss stops reducing your other income.

Notice what does not change. The rent is the same. The mortgage is the same. The suburb is the same. The tenant has no idea any of this happened. The only thing that changes is how much of the annual gap you carry alone.

So the reform makes a bad property more expensive to hold. It does not make a good property bad. Those are different problems and they have different answers, which is why “should I sell before 2027” cannot be answered in the abstract by anyone, including me.

Sell or hold an investment property: the three numbers

A ledger, a tax-rate disc and a magnifying glass over a growth chart, the three numbers that decide whether to sell an investment property

Most owners have never put these on the same page. It takes an hour and it is the whole decision.

One: your real annual shortfall. Rent received, minus mortgage interest, rates, insurance, management fees, strata, maintenance and the repairs you keep forgetting. Not the number from the year you bought. This year’s.

Two: what the deduction is actually worth. Multiply that shortfall by your marginal tax rate. That is the dollar figure you lose in 2027, and it is almost always smaller than people imagine. A $9,000 shortfall at 37 per cent is about $3,330 a year. Losing it stings. It is rarely the thing that decides whether you should own a property.

Three: your true growth rate. Purchase price plus stamp duty, plus every improvement, plus every year of shortfall you have funded. Against today’s realistic sale price, net of agent and legal costs. Spread over the years you have held it.

That third number is where the conversation usually goes quiet. It is frequently a long way below the growth rate the suburb advertises, because the suburb’s figure does not include the money you fed it.

The deadline is the worst reason to sell an investment property

Here is the part that gets missed while everyone watches the calendar.

If the change pushes a lot of similar established stock onto the market before mid-2027, buyers get choice, and vendors compete for them. That is not a prediction about a crash, it is just supply and demand, the same mechanism we read when we time a development. Australia’s structural housing shortfall argues against anything dramatic. But a bunched-up queue of sellers with the same deadline does not need a crash to cost you two per cent on price.

So if the numbers say sell, the numbers still do not say sell in June 2027 along with everybody else. Deciding to sell and deciding when to sell are two decisions, and people keep collapsing them into one.

None of this is a crystal ball, and the transitional detail is still settling. But the direction is clear enough to plan around.

If the property stacks up

Then the change is a cost increase on an asset that is working, and you handle it the way you would handle a rate rise. Model the new net position, check it still clears your own hurdle, and get on with it. The capital gains tax changes matter more to you than the gearing change does, because a long hold in a low-inflation stretch is where indexation bites.

If it does not stack up

Then something more useful than a tax reform has just happened: you finally have a reason to look at it honestly.

A property with a persistent shortfall and weak growth was destroying wealth quietly before this bill existed. The deduction made the bleeding tolerable, which is precisely what made it easy to ignore. The average Australian investor owns exactly one property and never buys a second, and the reason is usually this one, not a lack of money.

If you do redeploy, note where the tax system is now pointing. A new build keeps negative gearing, and there is more than one way to get one without becoming a developer yourself. What decides whether that works is not the tax treatment, it is the price you enter at, which is the argument we make about retail versus developer cost price.

What we would actually do

Model the three numbers. Take them to your accountant, with the legislation, and ask specifically how the transitional rules land on your holding. Decide on the property. Then, and only then, decide on the timing.

And be suspicious of anyone, us included, who tells you what to do with an asset they have never seen. MoneySmart is a good, unconflicted starting point on property investment generally. We are developers. We think new supply is where the tax system is pointing, and you should read us knowing that.

Frequently asked questions

Should I sell my investment property before July 2027?

Only if the property fails on its own numbers. The 2027 changes raise the cost of holding an established property that runs at a loss, because you can no longer offset that loss against your other income. They do not change whether the property is growing. Work out your real shortfall and your true growth rate first, then decide. This is general information, not tax or financial advice, and the decision should be made with your accountant.

What happens to negative gearing on my existing property in 2027?

From 1 July 2027 negative gearing is limited to new builds. For an established property that means a loss no longer reduces your other taxable income, so the full shortfall comes out of your pocket. The rent does not change and the mortgage does not change; what changes is how much of the gap the tax system shares with you. Confirm how the transitional rules apply to your own holding against the legislation and with your adviser.

How do I work out if my investment property is actually performing?

Take the purchase price plus every dollar of stamp duty, improvements and annual shortfall you have paid since. Compare that to today's realistic sale price net of selling costs. Divide the difference over the years you have held it. That is your real return, and it is usually a long way from the suburb's advertised growth rate. Most owners have never done this calculation, and it is the one that answers the question.

Is it a bad idea to sell when everyone else is selling?

It rarely helps your price. If a deadline pushes a lot of similar stock onto the market at once, buyers get choice and vendors compete. That is basic supply and demand, and it is the same dynamic we watch when timing a development. If you conclude you should sell, the timing question of when within the window is worth as much thought as the decision itself.

What are the alternatives to selling?

Depending on your position: hold and absorb the higher net cost if growth justifies it; sell and redeploy into a new build, which keeps negative gearing available; or restructure how you hold future purchases. Each has tax consequences that depend on your circumstances. We are property developers, not advisers, so treat this as the map rather than the instruction.

Sources

  1. Tax reform: boosting home ownership, reforming negative gearing and capital gains tax — Australian Taxation Office, accessed August 2026
  2. Capital gains tax — Australian Taxation Office, accessed August 2026
  3. Property investment — MoneySmart (ASIC), accessed August 2026
  4. State of the Housing System 2026 — National Housing Supply and Affordability Council, accessed August 2026