Is Negative Gearing Still Worth It After the 2026 Federal Budget?

The 2026 Federal Budget changed the property investment landscape. But if you have been reading the headlines and wondering whether property investment still makes sense, the honest answer is yes. Here is the accurate picture.

What actually changed

From July 2027, negative gearing losses on newly purchased established residential property can no longer be offset against wages income. That is the change. One tax treatment, on one asset sub-class.

What did not change

New builds are fully exempt. The government wrote this exemption in deliberately because they need new housing built. If you buy a new house-and-land package or off-the-plan apartment today, negative gearing is completely intact, losses still offset your wages income, and the CGT treatment remains favourable.

SMSF and commercial property are completely outside the reform. Every property owned before 7:30pm on 12 May 2026 is permanently grandfathered. Nothing changes for existing investors.

The three things the budget did not touch

The supply shortage is unchanged. Australia approved 195,000 dwellings in 2025 against a target of 240,000 - 45,000 short, every year. National rental vacancy remains below 1.5%. The CBA is forecasting 3% price growth in both 2026 and 2027.

The leverage mechanism is unchanged. A $600,000 new build purchased with an $80,000 deposit puts a $600,000 income-producing asset on your balance sheet from day one. That mechanism has built Australian household wealth for 60 years. The budget did not touch it.

What this means for Sydney investors

The rentvesting strategy, renting where you want to live, buying where the numbers work, remains viable for new builds in supply-constrained regional NSW corridors including Newcastle, the Central Coast, Wollongong, and the Southern Highlands. Target yield of 5 to 6 percent gross is achievable. A granny flat via complying development certificate adds $350 to $480 per week in additional rental income.

The perception gap

Most investors believe the budget fundamentally ended property investment. This is incorrect. The perception gap is larger than the actual policy change. The investors who understand what actually changed will act while others wait, waiting is expensive.

Talk to someone who understands the new rules

I am Jeremy Faul, founder of That Real Estate Guy, a NSW licensed exclusive buyers agent. I work exclusively for buyers, never the seller. If you want a clear picture of what the budget means for your specific situation, book a free 15-minute strategy call.

📞 0447 447 744 ✉️ info@thatrealestateguy.com.au 🌐 www.thatrealestateguy.com.au