The 2026-27 Federal Budget delivered the most significant shake-up to property tax rules in years. From 1 July 2027, negative gearing will be limited to new builds and the current 50% Capital Gains Tax discount will be replaced for established homes. For anyone weighing up their next investment, these changes make it worth understanding exactly how off-the-plan property now compares with buying established.
Off-the-plan investment has always had its champions, but the new legislation adds a fresh layer of appeal. Below, we break down what has changed, how it affects your bottom line and why off-the-plan continues to hold its own even outside the tax conversation.
The Budget, handed down on 12 May 2026, is designed to redirect investment toward new housing supply rather than existing stock. The practical effect is a widening gap between how off-the-plan and established properties are taxed.
Negative gearing remains available for eligible new builds, meaning investors can continue offsetting rental losses against their salary or other income. For established residential property purchased after 7:30 pm on 12 May 2026, that option is being phased out. From 1 July 2027, rental losses on these properties will be quarantined, so they can only be offset against rental income or capital gains from residential property rather than wages. Properties already held before the announcement are generally grandfathered under the old rules.
Capital Gains Tax treatment is shifting too. Investors in new builds can choose between the existing 50% CGT discount or the incoming system of cost-base indexation with a 30% minimum tax, whichever suits their position best when they eventually sell. Established property will move to the new indexation and minimum tax system only, without that same flexibility.
How the New Rules Compare:
For anyone building a long-term portfolio, that flexibility around new builds can make a genuine difference to after-tax outcomes, particularly for investors who also earn a salary they would like to offset against.
Tax treatment aside, off-the-plan property has long-standing advantages that make it worth a serious look.
New properties typically offer stronger depreciation benefits than older stock. Investors can generally claim deductions based on construction costs, which can improve the overall holding position when combined with other allowable expenses. Because everything from the fixtures to the building structure is brand new, there is simply more to depreciate compared with a decades-old home.
New homes often command better rental interest. Contemporary layouts, current design standards and features like low-maintenance finishes and energy-conscious design tend to appeal to tenants, some of whom are willing to pay a premium for quality and convenience. In a competitive rental market, that can translate into shorter vacancy periods and a more reliable tenant pool.
A brand new property typically needs less immediate upkeep than an established one, so investors can avoid the surprise repair bills that often come with older buildings. New builds also generally come with statutory warranties and defect liability periods, giving investors an added layer of protection in the early years of ownership.
Buying off-the-plan gives investors a window between exchange and settlement, while construction is underway, to prepare their finances, review lending options and lock in a property at today's price. Depending on the state and individual eligibility, buyers may also access stamp duty concessions or other government incentives along the way, which can further improve the numbers.
To give a balanced picture, established homes bring their own set of advantages worth considering.
Value-add potential. Established homes offer more scope to renovate, subdivide or upgrade, giving investors a direct way to build equity and appeal to specific buyer or tenant demographics.
A tangible asset. With an established property, investors can walk through the actual home, assess the street and inspect the local area firsthand, making it easier to judge quality and validate their assumptions against visible evidence.
Speed and flexibility. Established property offers a faster path to ownership and rental income, since there is no build to wait for. There can also be more room to negotiate on price.
Historical capital growth. Established homes have historically delivered strong capital growth over time and some investors prefer the track record that comes with buying in an already established pocket.
There is no single answer that suits every investor. The right choice typically comes down to individual financial goals, risk appetite and how each option fits into a broader portfolio strategy. What the new legislation does is sharpen the case for off-the-plan property, particularly for investors who value the combination of ongoing negative gearing eligibility and flexibility around Capital Gains Tax.
Whatever stage you are at, it is worth speaking with a qualified financial or tax adviser about how these changes apply to your own circumstances before making a decision.
If you would like to see what off-the-plan investment can look like in practice, Norus Projects offers current opportunities across Beach Point Sandringham, Sanctuary Sandringham, Parkview Burwood and Riverbend Ivanhoe. Each project offers a different location, lifestyle and property mix, allowing investors to compare floor plans, price points and project stages. Speak with the Norus Projects team to explore the current releases and find the option that best aligns with your investment goals.
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