Negative Gearing Changes 2027

What is changing with negative gearing in 2027?

From 1 July 2027, negative gearing for some residential investment properties is expected to change.

The key proposal is that investors buying established residential property after the relevant cut-off date may no longer be able to offset rental losses against salary or other non-property income. Instead, those losses may need to be carried forward or used against future residential property income or capital gains.

For Bentleigh property buyers and investors, the important point is this: new builds and established properties may be treated differently from 2027.

What is negative gearing?

Negative gearing occurs when the costs of holding an investment property are higher than the rental income it produces.

For example, if an investment property earns $35,000 per year in rent but costs $45,000 per year to hold, the property has a $10,000 annual loss.

Common property costs may include:

• loan interest
• council rates
• water rates
• insurance
• property management fees
• repairs and maintenance
• some depreciation expenses

Principal repayments are not deductible.

Why the 2027 changes matter in Bentleigh

Bentleigh is a popular Glen Eira suburb with a mix of period homes, renovated family houses, townhouses, villa units and apartments. Buyers are often attracted to Centre Road, Bentleigh Station, local schools, parks and nearby suburbs such as McKinnon, Ormond, Brighton East, Hampton East, Bentleigh East and Moorabbin.

For investors, Bentleigh has traditionally offered several different entry points. Some buyers look for older units or villa units. Others prefer townhouses, apartments near transport or homes with renovation potential.

The 2027 negative gearing changes may affect how investors compare these options.

An established townhouse or older unit purchased after the relevant cut-off time may no longer provide the same annual tax benefit if the property runs at a loss. A qualifying new build may be treated differently.

That does not mean established properties are poor investments. It simply means the cash flow needs to be reviewed more carefully before buying.

How could the 2027 changes affect Bentleigh property investors?

The 2027 negative gearing changes may reduce the tax benefit of buying an established investment property in Bentleigh if the property runs at a loss.

Investors may need to allow for higher after-tax holding costs, review investment home loans more carefully and compare established properties against eligible new builds.

This may affect:

• annual after-tax cash flow
• borrowing strategy
• interest-only versus principal and interest repayments
• property selection
• new build versus established property decisions
• future refinancing options
• long-term investment planning

Impact on first home buyers in Bentleigh

For first home buyers, the changes could have mixed effects.

If some investors become less active in established housing, first home buyers may face less competition for certain apartments, units or townhouses. This may be relevant in parts of Bentleigh where first home buyers and investors often look at similar properties.

However, Bentleigh remains a high-demand suburb. Families, professionals, downsizers and local upgraders may still compete strongly for quality homes close to transport, schools and Centre Road.

First home buyers should still focus on:

• borrowing capacity
• deposit size
• stamp duty
• lenders mortgage insurance
• loan pre-approval
• repayment comfort
• property type
• future interest rate changes

Speaking with a mortgage broker in Bentleigh can help you understand your borrowing position before making an offer.

Should Bentleigh investors still buy established property?

Bentleigh investors may still consider established property after the 2027 negative gearing changes, but the decision should be based on cash flow, rental income, loan structure, tax advice, property quality and long-term goals.

The loss of some tax benefits does not automatically make established property unsuitable.

An established property may still appeal because of location, land value, renovation potential, rental demand or long-term capital growth. However, investors should avoid relying only on tax benefits when assessing whether a property makes sense.

New builds may become more attractive

The proposed rules are designed to encourage more investment into new housing supply.

This may lead some Bentleigh buyers to consider:

• new apartments
• new townhouses
• off-the-plan properties
• newly constructed dwellings
• knock-down rebuild opportunities

However, new property still needs proper due diligence. Buyers should consider price, valuation, rental demand, builder risk, owners corporation fees, completion timing and resale appeal.

A new build may have tax advantages, but it still needs to make sense as a property and lending decision.

Refinancing options Bentleigh property owners should review

Existing Bentleigh property owners may also need to review their position.

If you already own an investment property, the proposed negative gearing rules may not change the treatment of that existing property if it was held before the relevant cut-off time. However, your loan structure, interest rate, repayment type and available equity can still affect your overall result.

Reviewing refinancing options in Bentleigh may include:

• checking whether your current interest rate is competitive
• reviewing fixed rate expiry dates
• comparing offset account options
• assessing equity for future investment
• reviewing interest-only versus principal and interest repayments
• considering whether your current lender still suits your goals

Not every refinance is worthwhile, but a home loan health check can help identify whether your current loan structure still makes sense.

What should Bentleigh buyers do before making an offer?

Before buying an investment property in Bentleigh, it is worth reviewing the numbers properly.

This includes:

• expected rental income
• loan repayments
• interest rate assumptions
• property expenses
• tax position
• cash flow before and after tax
• whether the property is new or established
• future refinancing options
• long-term ownership plans

A mortgage broker can help with borrowing capacity, lender options and loan structure. Tax advice should come from your accountant or tax adviser.

Speak with a mortgage broker in Bentleigh

The 2027 negative gearing changes may make property investment decisions more complex, especially for buyers comparing established properties with new builds.

At Finance Broker Melbourne we help clients across Bentleigh, Glen Eira, Bayside, Port Phillip and surrounding Melbourne suburbs review borrowing capacity, compare lender options and structure home loans based on their goals.

If you are buying, refinancing or investing in Bentleigh, speak with Brendon Cowan before making your next move.