Strategies
New build or established? Choosing after the 2026 tax changes
New builds keep negative gearing and the 50% CGT discount; established homes bought now don't. What counts as a new build, and why tax isn't everything.
General information only. This guide doesn’t consider your objectives, financial situation or needs, and isn’t financial, tax or credit advice. Tax and lending rules change — speak to a registered tax agent, licensed financial adviser or credit provider before acting on it.
The short version
- A new build must genuinely add to housing supply. The final definition is still being settled.
- Off-the-plan apartments and homes on vacant land qualify; a like-for-like knock-down rebuild doesn't.
- Under the Budget design, the tax treatment doesn't pass to later buyers — which can affect resale.
- Land content, build quality and settlement risk still matter more than the deduction.
The 2026 Budget put a new question in front of every property investor: new build or established?
Buy a new build, and you keep negative gearing and the choice of the 50% capital gains tax discount. Buy an established property, and from 1 July 2027 you don't. That's a real difference — but it isn't the whole decision, and treating it as one is how investors overpay for the wrong property.
The tax difference
| New build | Established home, bought after 7:30pm AEST 12 May 2026 | |
|---|---|---|
| Rental loss against your wages | Yes, before and after 1 July 2027 | Until 30 June 2027 only; then carried forward |
| CGT when you sell | Choice of the 50% discount or indexation with a 30% minimum | Indexation with a 30% minimum, for gains from 1 July 2027 |
| Depreciation of fixtures and fittings | Generally yes — they're new | Generally not for the ones that came with the property |
| Capital works deductions | The full 40 years from construction | Whatever is left of the 40 years |
The details of each rule are in negative gearing after the 2026 Budget and capital gains tax: the 2027 changes.
What counts as a new build
Treasury's test is that a new build must genuinely add to housing supply. Its Budget explainer gives these examples:
| Counts as a new build | Doesn't count |
|---|---|
| A newly constructed apartment bought off the plan | An established property extended to add bedrooms |
| A duplex built through a knock-down rebuild of a single house | A house built through a knock-down rebuild of a smaller house |
| Any residential construction on previously vacant land | A granny flat built next to an established property |
| A newly built property occupied for less than 12 months before it's first sold | A newly built property occupied for more than 12 months before it's sold to an investor |
Two further rules sit behind that table, as the Budget explainer describes them:
- It must be the first sale. A new build can't have been sold before, unless it was owned by the builder and occupied for no more than 12 months.
- The treatment doesn't pass on. Subsequent buyers can't access negative gearing or the 50% discount for that dwelling.
Why the tax break isn't the whole decision
The next buyer doesn't get it
This is the part most sales pitches leave out. Under the Budget design, when you sell your new build, the investor who buys it from you is buying an established property — with no negative gearing and no 50% discount. Owner-occupiers aren't affected, but some investors may be willing to pay less for a property that doesn't come with the tax treatment you enjoyed. How much that matters will depend on the market, and it's too early to know.
Land tends to drive long-term growth
Buildings wear out and depreciate; land doesn't. An apartment in a large tower has a small share of land per dwelling, while a house on its own block has a lot. Treasury's own analysis for the 2026 reforms found that over the past 20 years, houses held for ten years grew by an average of 6.1% a year, against 4.8% for units. Averages hide a lot of variation — but it's a reminder that the tax treatment on its own is a poor reason to choose.
New builds often carry a premium
New properties can be priced above comparable established ones — sometimes because marketing costs and sales commissions are built into the price. An independent valuation is the check. If a lender's valuation comes in below the contract price, you have to make up the difference in cash.
Off-the-plan risks
Buying before construction is finished brings its own risks:
- Valuation at settlement. The lender values the property when it's finished, which may be a year or more after you signed. If values have fallen, your loan may not cover the price.
- Your borrowing capacity can change before settlement — a new job, a rate rise or a lending policy change.
- Delays and sunset clauses. Construction can run late, and some contracts let the developer end the deal after a deadline.
- Builder insolvency and defects. Check the builder's history, and understand the warranty and insurance arrangements in your state.
- Supply. In estates or towers with a lot of similar stock, resale and rental competition can be tough.
Where established property still makes sense
An established property bought today loses the ability to offset its rental losses against your wages from July 2027. It still offers:
- More land for the money in many markets
- A rental history you can check before you buy
- Settlement in weeks, not years, at a price you can have valued now
- Scope to add value with a renovation — though an extension doesn't turn it into a new build
The change hits hardest on established properties that rely on a large tax refund to be affordable. It matters much less on one with a strong rental yield that's close to paying for itself.
Questions to ask about any property
- Would it be a good investment with no tax benefit at all? If the answer is no, the tax treatment is propping up a weak purchase.
- What does it cost to hold each week before tax? Can you carry that for years?
- What's the land value as a share of the price?
- Who will buy it from you, and will they get the same tax treatment?
- For a new build: what's the independent valuation, and what happens if it comes in low at settlement?
- For an established property: what does the building and pest inspection say?
Get a registered tax agent to confirm how the rules apply before you sign — especially whether a particular new build qualifies.
Sources
Checked against these sources on 15 September 2026.