Negative Gearing Changes Backed by Senate: What Investors Must Do

A Senate committee has endorsed the negative gearing and CGT discount changes — here's what it means for property investors and housing supply.

What the Senate committee endorsed

A Senate Economics Legislation Committee has recommended passage of federal Budget legislation that will change both negative gearing and the capital gains tax (CGT) discount for property investors.

The reforms form part of the government's Budget amendments targeting property investment tax concessions. Under the changes, negative gearing will be removed for established properties and confined to new builds beyond 2027.

Master Builders Australia has been among the loudest voices against the committee's endorsement. Chief executive Denita Wawn was direct about the potential consequences.

"The Committee's report turns a blind eye to the Budget's impact on housing supply," Wawn said. "It is a mistake to shift the policy focus away from increasing housing supply and to instead focus on higher taxes to deter investment."

The organisation's independent modelling projects the measures will reduce new housing supply by almost 9,000 homes over four years — a figure that Treasury's own modelling was said to support, according to Wawn.

The rent and supply crunch

One of the more immediate concerns flagged by Master Builders Australia is the flow-on effect for renters. At a time when vacancy rates are already under pressure, the removal of negative gearing for existing properties is expected to push some investors out of the market — and potentially push rents higher.

Independent modelling cited by Master Builders Australia projects that a property renting at $600 per week could see annual rental costs rise by $477 by 2029–30 as a result of the budget measures.

"This legislation… will only increase frustration for builders, who are simply trying to get on with the job, as well as aspiring homeowners and renters," Wawn said.

Master Builders Australia has called on policymakers to pursue supply-side interventions instead: enabling infrastructure investment, reduced regulatory burden, workforce pipeline development, and targeted investment incentives.

What CBA research says investors are thinking

The Senate endorsement comes at a critical juncture. Kevin Stanley, the Commonwealth Bank of Australia's director of commercial property research, has said the government's negative gearing changes are triggering what he described as a "once-in-a-generation" reset in investor activity.

"These are big decisions — kind of once-in-a-generation type decisions that need to be made," Stanley said.

Stanley noted there had been "a very significant investment into the residential sector" over the past year. With negative gearing no longer available on established properties beyond 2027, he said the central question was what happens to capital that has long been parked in existing houses and units.

Based on current conversations, Stanley said one likely outcome was a reweighting away from purely residential strategies — with investors starting to look seriously at commercial property.

"One of the biggest possibilities is that formerly residential investors will start to look increasingly at commercial property," he said.

Stanley pointed to commercial property's preserved tax settings and different risk-return profile. "Commercial property has a higher return and has more stable returns, longer-term leases. You're locked in," he said, adding that negative gearing "still applied" to commercial property. He noted that private buyers have accounted for about 33 per cent of the commercial market so far in 2026.

Even so, Stanley acknowledged the commercial market was not without headwinds, with transaction volumes having eased. He characterised the pullback as relatively contained — "for the market to still be tracking just 12 per cent below where it was last year is actually not a bad result."

He urged investors to pause and reassess. "This is really a time for investors to stop, reflect, do some research and figure out which part of the investment landscape they want to focus on," he said.

What this means for you right now

If you currently hold investment properties, or were planning to buy one, the timeline matters. The changes apply to established properties — not new builds. If your strategy depends on negative gearing a second-hand property, your options are shifting.

**If you're a current investor:** Review your loan structures before making any moves. Understanding how your cash flow looks if negative gearing disappears from your existing portfolio is the starting point. From there, a conversation about whether your current rate and structure still makes sense is worthwhile. Our [refinance savings calculator](/calculators/refinance-savings) can help you see whether switching could change your position.

**If you were planning to buy an investment property:** New builds remain eligible for negative gearing beyond 2027. That changes the calculus significantly — an off-the-plan or house-and-land package may make more financial sense under the new rules than a comparable established property.

**If you're a renter:** The projected $477 per year rent increase on a $600 per week property is not a small number, and it sits on top of cost-of-living pressures that are already biting. The housing supply debate has real consequences for renters, not just investors.

The Budget measures are still working through Parliament, and the detail in the final legislation will matter. Speak to a qualified tax adviser before making any major decisions about restructuring. For investors assessing their loan options across the market, our [investor home loan hub](/home-loans/investor) is a useful reference point.

[MPA Australia reports](https://www.mpamag.com/au/news/general/senate-committee-backs-negative-gearing-and-cgt-changes/579543) on the Senate committee's full endorsement and industry responses.