Is rentvesting dead after the 2026 Budget?

After the 12 May 2026 Budget, the headlines were blunt. The government had broken its promise not to touch negative gearing and capital gains tax (ABC News, 12 May 2026). A lot of people concluded rentvesting was finished.

It isn’t. But it has changed. This page explains what the law now says as at 6 November 2026, what’s still to be decided, and how that changes the way people approach rentvesting.

What actually changed

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 passed Parliament on 25 June 2026. For residential property acquired after 7:30pm AEST on 12 May 2026:

Negative gearing

• From 1 July 2027, net rental losses on established dwellings can no longer be offset against salary or other income. They’re quarantined to residential property income and gains and carried forward.
• New residential dwellings remain eligible for negative gearing, so losses can still be offset against other income, subject to the definition in legislation before Parliament.
• Properties held before Budget night are grandfathered.

Capital gains tax

• From 1 July 2027, the 50% CGT discount is replaced by indexation plus a 30% minimum tax.
• Owners of new dwellings can choose the 50% discount instead.

Sources: Pitcher Partners, Baker McKenzie, July 2026.

What hasn’t been decided yet

The definition of a “new residential dwelling” isn’t in the Act that passed. It’s in the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, which is before Parliament. The Senate Economics Committee is due to report on 13 November 2026.

The exposure draft covers a dwelling newly built on vacant land. The details, such as how off-the-plan apartments, knockdown-rebuilds and substantially renovated homes are treated, depend on the final law. Everything said about new dwellings is subject to legislation before Parliament. No one can tell you a specific property qualifies until it passes.

Why rentvesting isn’t dead

Rentvesting is a living arrangement plus an investment. Nothing in the Budget stops anyone renting where they live and owning an investment elsewhere. What changed is the tax treatment of one type of investment property.

	Before 12 May 2026	After 12 May 2026 (purchases)
Rent where you want, invest elsewhere	Yes	Yes
Established home, losses against salary	Yes	No, from 1 July 2027 (quarantined)
New dwelling, losses against salary	Yes	Yes, subject to legislation
50% CGT discount	Yes	Replaced by indexation plus 30% minimum tax from 1 July 2027; new dwelling owners can choose the 50% discount

So the question has moved from “is rentvesting possible?” to “which kind of property, given the tax rules?”.

How rentvesting has shifted

From established to new

Before the Budget, many first-time rentvestors bought established units or older houses. After it, an established purchase can’t use its losses against salary from 1 July 2027. That pushes up the after-tax holding cost for anyone whose property runs at a loss.

New dwellings keep that treatment, subject to legislation, and also generally have higher depreciation. That’s why interest has shifted towards house and land and other new builds.

New builds aren’t automatically better. They can carry a price premium, depend on a builder delivering, and can sit in estates with a lot of similar stock competing for tenants. An independent valuation matters.

From “tax-led” to “numbers-led”

When negative gearing applied to everything, some people bought largely for the deduction. With the rules split, more attention goes on whether the property makes sense on rent, cost and location. That’s arguably a healthier way to look at it.

Timing matters more

The dates matter. A property bought before 7:30pm AEST 12 May 2026 is grandfathered. One bought after isn’t. The quarantining starts 1 July 2027.

The market backdrop

It would be dishonest to talk about rentvesting in late 2026 without the market context. Cotality’s October 2026 figures showed national values down 1.2% in the month and 6.7% below the March peak, with Brisbane and Perth leading the decline, and national vacancy at a five-year high of 2.4% (Cotality).

That means:

• Values can keep falling, and anyone who has to sell may sell for less.
• Higher vacancy means more risk of empty weeks.
• Some buyers see lower prices as an opportunity. Others wait. Neither approach is right for everyone.

What people are weighing up now

• New versus established, and how confident they are in the final definition of “new”.
• Holding cost after tax, using the right treatment for the property type.
• Vacancy risk, and whether a rental guarantee from the property management company, for its fixed term, changes their worst case. See rental guarantees.
• Hold period, given the CGT changes and the market.
• What they give up, such as first home buyer grants and concessions.

The short version

Rentvesting isn’t dead. Established homes bought after Budget night lost negative gearing against salary from 1 July 2027. New residential dwellings kept it, subject to legislation before Parliament. The market is soft. It all depends on your circumstances, and a registered tax agent can explain how the changes apply to you.

See the changes explained live

For a walk-through of the 2026 changes and what they mean for how rentvesting works, join a free WPF GO webinar with Peter Khoury. General information only, not personal advice.