General information for Australian investors — not tax or financial advice.
Australian ContentLegislation & currency: Reflects current ATO treatment of rental deductions and capital gains, and the direction of proposed negative gearing reforms — including different treatment signalled for eligible new builds versus affected established residential property. Grandfathering may apply to existing investments.
The investor question
“Do the reforms change the investment case?” is really three separate questions — buy, hold and sell — each with its own variables. The negative gearing changes touch some of those variables, but the same principle runs through all three: tax treatment is one input, not the decision.
Buy
If you're deciding whether to acquire, the reforms may mean an eligible new build is treated differently from an established property. That difference is real — but it is one line in a much longer investment case, and it does not make a new build inherently a better investment.
- Property type: eligible new build versus established property, and their different treatment;
- Purchase price: what you pay relative to the property's fundamentals;
- Rental yield: the income the property generates against its price;
- Financing costs: interest and the structure of the borrowing;
- Expected cash flow: the periodic position after all costs;
- Expected capital growth: the value trajectory you're underwriting;
- Total expected return: income plus growth, after tax and after risk.
A more favourable tax treatment on a new build can improve after-tax cash flow — but a weaker price, yield or growth outlook can more than offset it. Model the total return, not the tax line in isolation.
Hold
For a property you already own, grandfathering may mean its treatment is unchanged. The question then is whether that changes the relative economics of continuing to hold this particular property — which is not something that resolves universally.
- Existing / grandfathered treatment: whether your current tax position is preserved;
- Current yield: the income the property produces today;
- Current debt: the loan balance and its interest cost;
- Cash flow: the position you're carrying each period;
- Equity: the capital tied up in the property;
- Expected growth: the value outlook from here;
- Opportunity cost of capital: what that equity could earn elsewhere.
Does grandfathered treatment change the relative economics of continuing to hold this property? Only your numbers answer that — preserved tax treatment is a reason to look closely, not an automatic reason to hold.
Sell
Selling is a comparison between the total return from continuing to hold and the total return from releasing the capital and deploying it elsewhere. Tax — including any capital gains tax on disposal — is part of that comparison, not the whole of it.
- Annual cash-flow economics: what holding costs or returns each year;
- Debt reduction: what selling would let you repay;
- Released equity: the capital a sale frees up;
- Alternative investments: the return that capital could earn elsewhere;
- Selling costs: agent, marketing and transaction costs;
- Potential CGT: the tax consequence of disposing;
- Expected future performance: what the property is likely to do if held;
- Total return, hold versus sell: the two paths compared on equal terms.
Tax treatment is one input into a buy-hold-sell decision, not the decision itself. A CGT bill on sale is a cost of releasing capital — weigh it against the return that capital can earn, not as a reason to hold by default.
Questions for your accountant
Buy, hold and sell each raise different tax questions — from how a new build is treated, to whether an existing property is grandfathered, to the CGT consequence of a disposal.
“For a purchase: how would an eligible new build be treated compared with an established property in my situation?”
“For a property I hold: is its current treatment grandfathered, and how might that change if I refinance or improve it?”
“For a sale: how would capital gains tax apply to this disposal, including any discount and cost-base adjustments?”
“How should I keep records to support the position for whichever path I take?”
Akweno can help you identify useful questions to discuss with your accountant when considering an investment decision. It does not provide tax advice or identify every matter that may require professional advice.
Explore the numbers
Model each path on total return before you decide — the calculators below cover income, growth and equity.
Try the calculators
Rental Yield Calculator
Compare the income a property generates against its price.
Open calculatorCash Flow Calculator
See the periodic position for buying, holding or the alternative.
Open calculatorROI Calculator
Compare total return across hold versus sell-and-redeploy.
Open calculatorEquity Forecast Calculator
Project how equity builds if you continue to hold.
Open calculatorGeneral information, not tax or financial advice
This guide is general educational information about how an investment decision could be affected by Australia's negative gearing settings. It is not tax, financial or legal advice, does not account for your circumstances, and tax settings can change. How any rule applies to you depends on your individual situation — confirm your position with a registered tax agent or licensed financial adviser before acting.
Negative Gearing & Investor Strategy
Return to the hub to see how buy, hold and sell fit the wider strategy.