Australia now has three negative gearing regimes running at once, and which one you are in decides the answer. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 quarantines residential rental losses from the 2027-28 income year. This works out your regime first, then the numbers.
| Taxable income | Tax on this income, 2026-27 |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 15c per $1 over $18,200 |
| $45,001 to $135,000 | $4,020 plus 30c per $1 over $45,000 |
| $135,001 to $190,000 | $31,020 plus 37c per $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c per $1 over $190,000 |
Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 2026-06-26. It inserts s 26-155 ITAA 1997 and s 26-160 ITAA 1997, and from the 2027-28 income year a residential rental loss is quarantined. Two exceptions survive, so three groups of investors now get three different answers from the same arithmetic.
A quarantined loss is not lost, and it is not recovered later either. It offsets residential rental income across the whole portfolio, and it carries forward indefinitely. It does not come back through the capital gain either: under s 110-38(8A) ITAA 1997 and s 110-55(9JA) ITAA 1997 a quarantined loss is not added to the cost base or the reduced cost base, so selling the property does not turn it into a smaller gain. That is the part worth being precise about. The deduction is not destroyed, but the only thing it can ever be set against is residential rent, and for an investor with one property and a salary there may be none for years. A deduction you might use in fourteen years is worth far less than one you use in April. For someone funding a shortfall out of each pay, that gap is the difference between a strategy that works and one that does not.
Same property, same rent, same loan. Three answers.
The second exception turns on whether a dwelling is a new residential dwelling. The statutory definition of that term is not yet law, pending a later tranche of amendments. Until it is made, nobody can tell you with certainty whether a particular property qualifies, and any tool that claims to is inventing a test the Parliament has not written.
So this page asks you and takes your answer. Choose Unsure and it shows you both outcomes side by side instead of picking one. If you need the answer settled, the Act as made is published by the Federal Register of Legislation: Act No. 49 of 2026. Your accountant is the right person to read it against your contract.
The quarantining rule applies to residential dwellings. These are excluded from that term:
The student entry is narrower than a plain reading of "student accommodation" suggests. The words that do the work are "in connection with": the exclusion turns on the dwelling's relationship to the institution, not on who happens to be living in it. If that distinction decides your position, it is worth advice on the specific property.
Short stay letting of an ordinary house or unit is still residential, so putting a suburban house on a holiday letting platform does not move it out of the rule.
The rule also does not reach every kind of owner. It does not apply to widely held unit trusts and complying superannuation funds, including self managed funds. This calculator covers individuals only, and every figure it produces assumes an individual holds the property directly.
It also never tells you what to do. There is no verdict on whether a property is a good investment, no suggestion to buy, hold or sell, and no scoring. It computes the figures the law produces from the numbers you enter, and stops there. This is general information rather than financial, tax or investment advice.
Find your contract date before anything else. It decides which of three regimes you are in, and the regime matters more than any number in the calculation. If you are quarantined and the year is 2027-28, the tax benefit is nil and the property costs you its full pre tax figure every week.