2026-27 Federal Budget
The 2026-27 Federal Budget proposed quarantining rental losses on residential investment properties contracted after 12 May 2026, from 1 July 2027. Whether your property is affected depends on when the contract was signed.
Announced
12 May 2026
7:30pm AEST, Federal Budget night
Takes effect
1 July 2027
Proposed. Not yet law.
Status
Proposed
Legislation not yet passed
Under existing rules, net losses from negatively geared investment properties can offset salary and wage income, reducing tax payable in that year.
The proposed change quarantines losses from residential investment properties contracted after 12 May 2026. A quarantined loss can only be applied against:
A quarantined loss cannot reduce salary or wage income in the year it occurs.
Established residential properties with a contract of sale signed on or before 12 May 2026 are proposed to be grandfathered.
Grandfathered properties retain full negative gearing under the existing rules. Losses can continue to offset salary and wage income as before. The cut-off is the contract date, not settlement.
Newly constructed residential properties are proposed to remain eligible for full negative gearing. The legislative definition of new build has not yet been released.
Self-managed superannuation funds are not subject to the proposed quarantining rules under the current announcements.
Widely held trusts are not subject to the proposed quarantining rules under the current announcements.
Under the 2026-27 Federal Budget proposal, net rental losses from residential investment properties contracted after 12 May 2026 will be quarantined. Those losses can only offset residential rental income or capital gains, not salary or wage income. Established properties with contracts signed on or before 12 May 2026 are proposed to be grandfathered under the existing rules.
Established residential properties where the contract of sale was signed on or before 12 May 2026 are proposed to be grandfathered. These retain full negative gearing under existing rules. Losses can continue to offset salary and wage income. The cut-off is the contract date, not settlement. Confirm your specific situation with a registered tax agent.
Loss quarantining means a net rental loss from a residential investment property can only be applied against residential rental income from other properties, or capital gains when the property is eventually sold. It cannot reduce salary or wage income in the year the loss occurs.
The proposed effective date is 1 July 2027. The change was announced in the 2026-27 Federal Budget on 12 May 2026 and remains proposed legislation. It has not yet passed into law.
Newly constructed residential properties are proposed to remain exempt from loss quarantining. The legislative definition of new build has not yet been released. Confirm the status of any specific property with a registered tax agent.
Proposed legislation, effective 1 July 2027. Indicative only. Not tax or financial advice. Confirm with your accountant or registered tax agent. Budget tax reform detail (budget.gov.au)
Brikly flags which of your properties are grandfathered and which face quarantined losses. It won't tell you what to do.
Early access. No financial advice. Just the numbers.