That's the headline. But the detail matters, so let's break it down properly. 

If You Already Own an Investment Property, Nothing Changes. 

Properties held before Budget night are grandfathered. If you bought (or signed a contract on) your investment property before 7:30pm AEST on 12 May 2026, the existing negative gearing rules continue to apply to that property as they always have. This can also include the house you are currently living in, if you start renting it out now. 

No action required here, just good to have it confirmed. 

Buy an Established Property After Budget Night? The Rules Are Different. 

This is where the real shift happens. If you purchase an established (i.e. not new) residential property after Budget night, and it produces a rental loss, that loss can no longer be offset against your salary or wages from 1 July 2027. 

Instead, the loss is quarantined, meaning it's carried forward and can only be used to offset future residential property income (or future capital gains from property), rather than reducing your tax bill this financial year. 

In practical terms: the tax benefit doesn't disappear, but the timing changes. Rather than getting an annual offset against your pay each year, you'll generally only benefit from those losses down the track, once you have property income (or a capital gain) to use them against. 

New Builds Are Exempt. 

Here's the exception worth knowing about: eligible new residential builds remain completely unaffected. If you buy a new build, you can continue to negative gear it against your other income exactly as you do now. 

This is a deliberate policy choice, the government wants to direct investment toward new housing supply, not just established stock. If you're weighing up new construction versus an established property as your next investment, this is now a meaningful factor in that decision, alongside the usual considerations like depreciation, land value, and expected growth.