Highlights

  • From 1 July 2027, enacted law limits negative gearing to new builds, with properties held at 12 May 2026 grandfathered.
  • The Tax Reform No. 3 Bill would keep negative gearing for build-to-rent, NDIS, retirement village and other specified housing.
  • Those housing carve-outs share a bill with the trust minimum tax, so Senate rejection would remove them as well.
  • Twelve rules remain in ministerial instruments not yet released, leaving investors without key detail on which dwellings will qualify.

Picture the Senate Economics Legislation Committee's inbox on Thursday 29 October, the day submissions close on a bill that bundles two very different ideas. One is Labor's contested 30% minimum tax on discretionary trusts. The other is a set of exceptions that would keep negative gearing alive for build-to-rent, NDIS homes, retirement villages and other specified housing. Vote the first down and the second goes with it.

What is already law

The ATO says the core property changes "are now law" under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026, and both begin on 1 July 2027. Negative gearing is limited to new builds, and properties held at 7:30pm AEST on 12 May 2026 are grandfathered.

Indexation plus a 30% minimum tax takes the place of the 50% CGT discount for individuals, trusts and partnerships, touching only gains accruing after 1 July 2027. The ATO's page does not yet define "new builds" or show how indexation or the minimum rate will be calculated.

What the new bill adds

The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 was introduced on 14 October, with a companion bill setting the trust tax rate. Beyond the trust measure, it amends the legislated reforms on "cost base rules, residency changes, and treatment of new residential dwellings and affordable housing".

Under the bill, negative gearing would stay available for qualifying new dwellings, affordable and public housing, NDIS dwellings, build-to-rent developments, retirement villages and residential care homes.

Draft legislation released in August proposed that a property is generally "new" if it "genuinely adds to housing supply" and is acquired within 24 months of a certificate of occupancy. The Budget had said 12 months.

One vote, two outcomes

If the Senate rejects the trust provisions, the housing measures fall with them. The enacted rules would stand without the Tax Reform No. 3 changes, and how each housing type would be treated is unclear.

The numbers are tight. The Coalition is against the bill, and the Greens sought the inquiry, so negotiation is unavoidable. The Greens backed the negative gearing and CGT legislation in June but worry that private school fees paid from trusts would be exempt.

Rules investors still cannot see

Twelve rules in the package are left to ministerial instruments, and further integrity amendments on CGT, residency, international tax and administration are foreshadowed. The new-build rules carry a broad anti-avoidance provision, which CPA Australia's Jenny Wong calls "self-executing" and able to apply where a tax benefit is one purpose, not necessarily the dominant one. The Tax Institute's John Storey said: "This process is not how good tax policy should be implemented."

What the carve-out is worth

Hypothetical: an investor earning $150,000 buys an NDIS dwelling after the cut-off. In 2027–28 it earns $32,000 in rent against $40,000 of interest and $7,000 of other costs, a $15,000 loss. If negative gearing applies, taxable income falls to $135,000, and at 37% plus the 2% Medicare levy the loss is worth about $5,850 that year. If the property did not qualify, that reduction would be lost.

The illustration uses 2026–27 resident rates and ignores depreciation, offsets and loss carry-forward.

Supply pressure and dates

The ABS reports total dwelling approvals fell 6.1% to 16,953 in August. Apartment approvals dropped 24.9% to 3,268 and townhouses fell 20.7%. Build-to-rent projects tend to be higher-density, so developers and institutional investors will watch the outcome.

Submissions close Thursday 29 October, hearings are expected in November, and the committee is due to report on 13 November. Until the bill passes, the build-to-rent, NDIS and retirement village exceptions remain proposed, not enacted.