Off the plan investment property: tax, costs and the 2027 rules.

Advertising for tenants, body corporate administrative fund fees, council rates, water charges, land tax, cleaning and gardening, pest control, insurance, interest, pre-paid expenses, property agent's fees and commission, repairs and maintenance, and legal expenses relating to the tenancy (ATO, updated 21 May 2026). Regular payments to the administrative and sinking funds are deductible when incurred; a special levy to fund a capital improvement is not, though the work may then be claimed as capital works (ATO).

You can claim interest, council, water and sewerage rates, land taxes and levies you incur before using the property, provided you are holding it to produce rental income, and you must keep evidence such as communications with agents or rental managers (ATO, updated 23 July 2026). For an off the plan purchase that is the gap between settlement and the first lease.

Loan establishment fees, lenders' mortgage insurance, title search fees, mortgage document costs, broker fees, the valuation fee for loan approval and stamp duty on the mortgage are claimed over 5 years or the loan term, whichever is shorter; $100 or less is claimed at once. Transfer duty on the property and the conveyancing are capital expenses and not deductible (ATO, updated 22 May 2026).

Capital works at 2.5% a year for 40 years from completion, and the decline in value of new depreciating assets bought with a newly built property. Our depreciation guide covers the rules, the effective lives and the quantity surveyor's report.

Losses on residential dwellings acquired at or after 7:30pm AEST on 12 May 2026 that are not new residential dwellings. From 1 July 2027 the excess is not deductible that year; it can be applied against net capital gains and otherwise carries forward against future residential property income (Act No. 49 of 2026, s 26-155). Treasury puts it plainly: investors who buy established housing after 12 May 2026 cannot deduct losses against non-residential income such as wages.

Properties held at announcement, including where a contract has been entered into but not yet settled, will be allowed to be negatively geared in future years until sold (Budget explainer). For a property acquired under a contract, you have an ownership interest from the time you enter the contract (s 26-155(3)), so an off the plan contract signed before 12 May 2026 is grandfathered even if it settles in 2028.

Investors who buy new builds will also continue to have access to negative gearing. This means if they make a rental loss on a new build, they can still use that loss to reduce their taxable income, including salary and wages (Budget explainer). The explainer describes new builds as dwellings constructed on vacant land or replacing demolished properties with more dwellings, not previously sold unless first owned by the builder and not occupied for more than 12 months, and says subsequent purchasers will not be able to access the 50 per cent CGT discount or negative gearing in relation to that property.

The Act delegates the definition of a new residential dwelling to a ministerial legislative instrument (s 26-160(4)). Until it is made, the Budget explainer wording above is the best official description. Our negative gearing calculator shows both outcomes so you can see what eligibility is worth on your figures.

You can reduce your capital gain by 50% if you owned the asset for at least 12 months and are an Australian resident for tax purposes. Trusts also get 50%; complying super funds 33.33%; companies nothing. Foreign and temporary residents lost the full discount after 8 May 2012 (ATO, updated 29 June 2026).

When you buy under contract and don't take immediate possession, which commonly happens with real estate, your acquisition date is the date on the contract, not when you settle (ATO, updated 22 June 2026). The CGT event on sale is also the contract date. For an off the plan purchase the 12 month clock may have run before you have the keys.

The 50% discount for resident individuals, trusts and partnerships is replaced with cost base indexation on gains that accrue on or after 1 July 2027, with a minimum 30% tax for individuals on certain net capital gains. Assets owned before then are split: the discount applies to the gain up to the asset's value immediately before 1 July 2027, and indexation and the minimum tax to the gain after, using the 1 July 2027 market value as the cost base (ATO, published 13 October 2026).

You can choose to continue to apply the current arrangements and the 50% CGT discount for assets owned on, or purchased on or after, 1 July 2027 that are new residential dwellings or used to provide affordable housing (ATO, published 13 October 2026). The main residence exemption is unchanged. Our CGT reform calculator compares the two treatments.