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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The first reports of how property investors are responding to the new tax law arrived on 16 July, and they point in two directions. The Australian reported that investors are moving into house-and-land packages in new estates, where the old tax treatment survives. The Adviser reported a warning from the Property Investment Professionals of Australia that others are chasing rental income into corners of the market that lenders treat with caution.
A third pressure sits over both. Self-managed superannuation funds lose the ability to take out new loans for residential property on 10 August, and The Adviser reported that some buyer's agents are urging clients to purchase before then.
The Australian Taxation Office's page on the reforms, updated on 29 June, records that the legislation received royal assent on 26 June and that the measures are now law. The negative gearing and capital gains changes begin on 1 July 2027. What the mid-July reports describe is the behaviour of investors in the year before the start date.
The Adviser and The Australian, 16 July 2026, as republished by the Property Investment Professionals of Australia. The inquiry figure is Focus Property Group's own.
The deadline for super funds
The lending ban was the Senate's addition to the tax package. Under it, self-managed super funds can no longer enter new limited recourse borrowing arrangements for residential property from 45 days after royal assent. Counting from 26 June, that is 10 August. Existing loans are not affected.
The Adviser's report quoted Phil Tarrant, a director of the publisher Momentum Media, on what is happening in the weeks before the cut-off. Buyer's agents, he said, are pressing clients to buy before 10 August, a decision that "may be right for some people, probably wrong for a lot of people".
Related readNegative gearing changes pass Parliament with a super fund lending banThe same report set out what PIPA's chair, Cate Bakos, expects afterwards. With no new loans being written, fewer lenders may compete for the existing ones, which could lead to rate increases that have nothing to do with the Reserve Bank. And a fund holding a property that performs poorly may find it harder to refinance.
For trustees, the point is that a deadline is a reason to decide, not a reason to buy. A property bought in a hurry inside a super fund stays there under the same borrowing structure for years. Whether such a purchase suits a particular fund is a question for a licensed financial adviser.
Why a new build now adds up differently
The law draws its main line between new and established homes. From 1 July 2027, a rental loss on an established home bought after Budget night can be used only against rental income, while a loss on a new build can still be set against wages and other income. Investors in new builds can also choose to keep the 50 per cent capital gains tax discount.
The Australian's report, by Anthony Keane and Noah Yim, put weekly figures on the difference. A median-priced established property leaves an investor about $700 a week out of pocket after tax, it said, while a new build leaves a shortfall of less than $215 a week. A new home, on the report's figures, offers roughly $20,000 a year in depreciation and more than $35,000 in other deductible costs.
| Point | Established home | New build |
|---|---|---|
| Rental loss against wages | No | Yes |
| 50% capital gains discount | Replaced by indexation and a 30% minimum tax | Owner may choose to keep it |
| Depreciation on fittings | Not for second-hand assets | Available on new assets |
| Reported weekly shortfall after tax | About $700 | Under $215 |
Budget 2026-27 papers; ATO guidance on depreciating assets in rental properties; weekly figures as reported by The Australian, 16 July 2026, for a median-priced property.
The depreciation row is not new. The ATO's guidance says that in most cases a deduction cannot be claimed for second-hand depreciating assets, such as the appliances and carpets that come with an existing home, under a rule that has applied since 2017. New assets in a new property can be depreciated, and the building itself attracts a capital works deduction, generally 2.5 per cent of construction cost a year over 40 years. New homes carried larger deductions before the Budget. What has changed is that from next July only new homes let the owner use the resulting loss against a salary.
Related readOwn name, company or trust: how a Queensland rental can be heldThe response has been quick. Focus Property Group told The Australian that inquiries had risen 46 per cent since the Budget, and one finance firm said five clients had switched from established properties to house-and-land packages within two weeks.
Sharing the estate with first-home buyers
The shift puts investors into a part of the market built largely for someone else. The Australian reported that first-home buyers make up 40.7 per cent of buyers of new builds, against 19.9 per cent for local investors.
If investors' share rises, the two groups will be bidding for the same blocks. The report does not say that this has yet moved prices, and the figures above describe the position before any change in the mix.
One definition is still missing. The legislation refers to a "new residential dwelling" and leaves its meaning to a legislative instrument that has not been published. A buyer of a house-and-land package is at the clear end of that definition. Buyers of near-new homes, or of homes rebuilt on an existing site, are not yet able to check their position against a published test.
What lenders are doing with the numbers
A tax deduction only helps an investor who can borrow in the first place, and the reports suggest lending assessments have already changed. Ms Bakos told The Australian: "Lenders don't calculate negative gearing now when assessing a borrower's ability to repay a loan."
She gave one example from her own practice, a client whose borrowing capacity fell from $800,000 to $500,000. At her Melbourne buyer's agency, she said, investors have gone from about half of all clients to fewer than one in ten. Those are one adviser's observations in another state, not a measure of the Queensland market.
Related readQueensland accounts for 37 per cent of investor sales in PIPA surveyThe effect she describes runs ahead of the law. Although the restriction on losses does not start until July 2027, a loan written today will still be running then, so a lender assessing a purchase of an established home has reason to leave the tax benefit out.
The risks PIPA sees in the search for yield
If a loss can no longer be offset, the alternative is a property that does not make a loss. The Adviser reported that this is steering investors toward property with stronger immediate income: regional towns, small units, commercial property and unusual titles.
Ms Bakos's warning is about what comes with those. Many lenders set a minimum floor area for apartments and apply tighter loan-to-value ratios to non-standard titles, the report said, so the deposit required can be much higher than for an ordinary home. Lower prices in these segments often reflect a thinner pool of buyers, which matters on the day the owner wants to sell or refinance.
She accepted that positive cash flow helps an owner meet repayments and absorb rate rises. Her objection is to treating it as the goal, and she put it in a phrase: "cash flow alone does not build wealth".
How the shift looks from Queensland
The reports are national, and the one example drawn from an adviser's own practice is from Melbourne. The conditions they describe are present in Queensland in a pronounced form.
Yields in the capital are low. Cotality's June home value index, published on 1 July, put the gross rental yield at 3.3 per cent for Greater Brisbane and 4.1 per cent for regional Queensland, with the Reserve Bank's cash rate at 4.35 per cent. An established Brisbane house bought with a large loan is the textbook case of a property whose rent does not cover its interest.
Units and regional markets are where the income is stronger, and they have already had a long run. Cotality's June tables show Brisbane unit values up 2.2 per cent over the quarter to a median of $885,132, and annual growth above 20 per cent in parts of the Darling Downs and in Toowoomba. In the same release, Cotality named investor-heavy markets among those most exposed to a loss of momentum.
Investors also arrive at the tax change holding an unusually large share of local borrowing. Domain's Forecast Report 2027, published on 25 June, put investors above 40 per cent of lending in Brisbane, against a ten-year average of 32 per cent.
The Australian's report closed with the checks it suggested before signing a contract for a new build, which apply as well in Logan or Ripley as anywhere:
- The rents actually achieved on completed homes in the same estate.
- Whether the person recommending the property is paid a commission by the developer.
- The builder's completion timetable and what the contract says if the build runs late.
- Borrowing capacity as a lender assesses it under the new rules.
None of that is advice for a particular buyer. It is a list of the places where a purchase made for tax reasons can meet the facts of the property itself.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
