# Negative gearing changes pass Parliament with a super fund lending ban

Parliament passed the negative gearing and capital gains tax changes on 25 June, adding a ban on new super fund loans for housing. What is settled, and what is still to come.

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The changes to negative gearing and capital gains tax announced in the May Budget passed federal Parliament on Thursday 25 June 2026. The House of Representatives agreed to the Senate's amendments to the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 by 98 votes to 39, The Adviser and Mortgage Professional Australia reported, after the Government reached an agreement with the Greens to get the bill through the upper house.

The core of the package is as it was introduced four weeks ago. From 1 July 2027, negative gearing on residential property is limited to new builds, and the 50 per cent capital gains tax discount gives way to a different method. Homes that investors already owned on Budget night keep their existing treatment.

The Senate did add something that was not in the Budget: a ban on self-managed superannuation funds taking out new loans to buy residential property. And the Government has said that at least one part of the law, dealing with jointly owned homes after a death or a divorce, will be changed by a second bill later this year.

<div class="keyfacts">
<div><b>98 to 39</b><span>the final vote in the House</span></div>
<div><b>1 July 2027</b><span>start of the gearing and capital gains rules</span></div>
<div><b>45 days</b><span>from royal assent to the super lending ban</span></div>
</div>
<p class="src">The Adviser and Mortgage Professional Australia, 25 June 2026; KPMG tax news, 26 June 2026.</p>

## What Parliament passed

Accountants Daily reported on 25 June that two bills cleared both houses: the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026.

On negative gearing, the rule is the one set out in the Budget papers. An investor who buys an established home after Budget night will, from 1 July 2027, be able to deduct a rental loss only against rental income, with any unused loss carried forward. Investors in new builds keep the full deduction against their other income, and properties held before Budget night are unchanged.

On capital gains, KPMG's summary of the legislation as passed says the 50 per cent discount is replaced by indexation of the cost base, so that only the gain above inflation is taxed, together with a minimum tax of 30 per cent on capital gains, with exemptions for some recipients of income support. The new method applies to gains that build up on and after 1 July 2027. Accountants Daily notes that the discount is preserved for new housing.

The package also contains measures unrelated to property: a $1,000 standard deduction for work-related expenses, a tax offset for working Australians, a higher threshold for small business capital gains concessions and a new concession for start-ups.

Mortgage Professional Australia reported the Treasury figures behind the housing measures. About 85 per cent of a projected $3.6 billion in additional revenue comes from the negative gearing restriction and the remaining 15 per cent from the capital gains change, and together the two are expected to raise more than $40 billion over a decade.

## The Senate's addition: super funds and home loans

The price of Greens support was a measure aimed at self-managed super funds. Under the agreement, as described by the Property Investment Professionals of Australia on 24 June, such funds will no longer be able to enter new limited recourse borrowing arrangements for residential property. A limited recourse borrowing arrangement is the structure a super fund must use if it borrows to buy an asset. The ban takes effect 45 days after the law receives royal assent. Existing loans, and purchases already under way, are not affected.

Industry groups responded quickly. PIPA's chair, Cate Bakos, said the people most affected would be families with a substantial super balance but limited borrowing capacity in their own names, because most funds cannot buy a property outright. She put lending inside self-managed funds at about 1 per cent of the residential market. Smart Property Investment quoted her on 23 June as saying: "These investors will miss out on this opportunity to build future wealth."

The Mortgage and Finance Association of Australia told The Adviser the restriction would "remove an established and well-regulated pathway". Zoran Solano, vice-president of the Real Estate Buyers Agents Association, argued that affordability depends on supply, telling Smart Property Investment: "Housing affordability will be improved by increasing housing supply, not reducing buyers."

The Greens also secured a second change, according to Real Estate Business: future ministers cannot wind the measures back by regulation. Any reversal would need legislation.

## What the Senate committee found

The bill reached the floor after a short inquiry. SmartCompany reported on 22 June that the Senate Economics Legislation Committee, chaired by Labor senator Lisa Darmanin, held two days of hearings and published its report on the Friday before, and that the report itself remarked on its tight timeframe.

The majority recommended that both bills be passed. KPMG's note of 23 June records the committee's finding that there was substantial evidence that the way the capital gains discount and negative gearing work together had made investment in existing housing overly favourable, and its view that removing that preference would encourage capital to move toward more productive assets.

The report was not unanimous. Coalition senators opposed the bill and recommended a further review to report by December 2026, according to SmartCompany. The Greens' Nick McKim sought more certainty on the carve-outs and less discretion for Treasury, and independent senator David Pocock questioned Treasury's modelling. In the chamber, Accountants Daily reported, Liberal senator Slade Brockman called the changes "a retrograde step".

## What still has to be written

Passing the bill does not finish the job. Three pieces are outstanding.

The first concerns couples and families. Smart Property Investment reported that senator Pocock raised a gap in the exemption for existing properties: where an investment property is jointly owned and one owner's share passes to the other through death or divorce, the person receiving the share would lose the protection on it. The publication put the number of jointly owned investment properties relying on the exemption at about 680,000. Finance Minister Katy Gallagher said the Government was aware of the issue and would deal with jointly owned assets in cases such as inheritance and divorce in later legislation. Real Estate Business reported that the supplementary bill is to come later in 2026, along with carve-outs for small business.

The second is the definition of a new home. The law firm Corrs Chambers Westgarth, in its summary of the bill, noted that the meaning of "new residential dwelling" is to be set out in a separate legislative instrument, described so far only as covering properties that genuinely add to supply. Until that is published, buyers of near-new or substantially rebuilt homes cannot be certain which side of the line they fall on.

The third is valuation. The capital gains change works by treating assets as sold and bought back at the changeover, and Corrs listed the method for working out that value among the details still to be settled.

## Four Queensland investors, four positions

The practical effect differs sharply depending on what a person owns and when they bought it.

<figure class="fig"><figcaption><b>Where the new law leaves different investors</b><span>General position under the legislation as passed on 25 June 2026</span></figcaption>
<div class="scroll"><table class="tbl">
<thead><tr><th>Situation</th><th>Rental losses from 1 July 2027</th><th>Still uncertain</th></tr></thead>
<tbody>
<tr><td>Owned the rental on Budget night</td><td class="yes">Deductible as now</td><td>Joint owners after death or divorce</td></tr>
<tr><td>Bought an established home since</td><td>Only against rental income, then carried forward</td><td>Nothing in the gearing rule</td></tr>
<tr><td>Buying a new build</td><td class="yes">Deductible as now</td><td>The definition of a new dwelling</td></tr>
<tr><td>Self-managed fund planning to borrow</td><td>Not the issue: new housing loans are banned</td><td>The exact start date, set by royal assent</td></tr>
</tbody>
</table></div>
<p class="src">Budget 2026-27 papers; reports by The Adviser, Real Estate Business and Smart Property Investment, 23 to 25 June 2026; PIPA, 24 June 2026.</p></figure>

The first row covers most existing Queensland landlords. The second is where the arithmetic bites in this state. Cotality's most recent tables put the gross rental yield at 3.3 per cent for Greater Brisbane dwellings and 4.1 per cent for regional Queensland, while the Reserve Bank's cash rate has been held at 4.35 per cent since May. A buyer who borrows most of the price of an established Brisbane home at current values will usually pay more in interest than the rent brings in, and from mid-2027 that shortfall will no longer reduce the tax on a salary.

Units and regional property, with higher yields, are closer to covering their own costs, and new builds keep the old treatment. Domain's forecast report, published on the day the law passed, expects Brisbane unit prices to rise by 5 to 9 per cent in 2026-27, a stronger result than it forecasts for houses, and the Australian Associated Press reported the company's view that tight rental markets and population growth make it more likely in Brisbane that a buyer finds a property whose rent covers its costs. That is a forecast and a view, not an outcome.

## The dates from here

Prime Minister Anthony Albanese said the vote would provide "workers, businesses, and investors with certainty ahead of the 1 July 2027 commencement date", Mortgage Professional Australia reported. The sequence now runs as follows.

<figure class="fig"><figcaption><b>From the vote to the start of the new rules</b></figcaption>
<ol class="steps five">
<li><b>Royal assent</b><span>The formal step that turns the bill into an Act and starts the clock on the super lending ban.</span></li>
<li><b>45 days after assent</b><span>Self-managed super funds can no longer take out new loans for residential property.</span></li>
<li><b>Later in 2026</b><span>A supplementary bill on jointly owned homes after death or divorce, and on small business.</span></li>
<li><b>Date not announced</b><span>The legislative instrument that defines a new residential dwelling.</span></li>
<li><b>1 July 2027</b><span>The negative gearing restriction and the new capital gains method begin.</span></li>
</ol></figure>

Accounting bodies have warned that the capital gains change brings significant complexity and a good deal of valuation work, according to Accountants Daily. For individual investors the general position is now clear enough to plan around, but how it applies to one person's loans, income and ownership structure is a question for a registered tax adviser, and for trustees of a self-managed fund, a licensed financial adviser.