If you are weighing up a new build against an established home, the tax treatment is no longer a footnote. Following the 2026 tax reform, the two are treated very differently, and that difference can change the after tax position of an investment substantially.
Here is what actually separates them.
Negative Gearing: The Rules Changed in 2026
Negative gearing describes what happens when the cost of holding an investment property, mostly loan interest plus expenses, is higher than the rent it produces. Historically, that shortfall could be used to reduce your other taxable income.
Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which received Royal Assent on 26 June 2026, that treatment is being limited to new builds and to government housing priorities such as build to rent and social or affordable housing.
- Eligible new build residential property keeps negative gearing.
- Established dwellings purchased after 7:30pm AEST on 12 May 2026 are restricted. The loss can only be deducted against other residential property income, not against your salary or other income, and that restriction applies from the 2027 to 2028 income year. Properties already held at the time of the announcement can continue to be negatively geared until they are sold.
That is a structural difference, not a marketing angle. Two investors can buy properties at the same price, borrow the same amount and carry the same shortfall, and end the year in materially different tax positions purely because one bought new and one bought established.
There is a second change worth knowing about, and it applies far more broadly than the first. From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced with cost base indexation and a minimum 30% tax rate on gains accruing after that date. The 50% discount still applies to gains accruing up to 1 July 2027. Because this applies to all property, not just established property, it is not a point of difference between new and established stock. How that interacts with your own holding period and asset mix is a question for your accountant.
Depreciation: Why New Stock Claims More, For Longer
Depreciation is the second lever, and it is simpler.
A property loses value in two ways the tax system recognises: the building itself, and the plant and equipment inside it such as appliances, air conditioning, floor coverings and hot water systems. Those decline in value over time, and that decline can generally be claimed as a deduction.
A new build gives you a longer term of depreciation to claim, because you are starting the clock at zero. Nothing in the property has been depreciated by a previous owner. Every appliance, every fitting and the structure itself begin their effective life under your ownership.
An established home is the opposite. Part of its depreciable life has already been used up by whoever owned it before you, and the rules around claiming plant and equipment in second hand residential property are more restrictive. You are inheriting a partly spent asset from a tax point of view, as well as a physical one.
For an investor, the practical effect is that a new build typically produces a larger deduction in the early years, which can help offset your income at the point where holding costs are highest.
What This Means When You Are Comparing Two Properties
Put the two levers together and the picture is clear enough. Capital gains tax is deliberately left out of this table, because the CGT rules are themselves changing from 1 July 2027 and the comparison depends on when you sell:
| New build | Established (bought after 7:30pm AEST, 12 May 2026) | |
|---|---|---|
| Negative gearing against other income | Retained | Restricted to residential property income, from 2027-28 |
| Depreciation runway | Full, from year one | Partly used, more restricted |
A cheaper purchase price on an established home is a real advantage, and this article is not arguing otherwise. What it is saying is that the headline price is now only part of the comparison. The after tax cost of holding the two assets can differ enough to close, or reverse, an apparent price gap.
Where Purpose Built Property Sits
Purpose built investment stock, including NDIS Specialist Disability Accommodation, co-living and triple living dwellings, is delivered as new build. That means it sits on the new build side of both lines in the table above: a full depreciation runway, and negative gearing retained rather than quarantined.
That is not a reason on its own to buy. It is a reason to make sure the tax comparison is part of your numbers rather than an afterthought, and to get those numbers checked by someone qualified to check them.
This is general information only and not financial, tax or legal advice. Tax outcomes depend entirely on your personal circumstances. Speak to a registered tax agent or licensed adviser before you act.
Talk to ACIGP about how a specific new build stacks up against the established property you are considering.
Sources: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026, Royal Assent 26 June 2026), Federal Register of Legislation; and Australian Taxation Office, “Tax reform: Boosting home ownership: Reforming negative gearing and capital gains tax”.