The reform at a glance

Handed down at 7:30 pm AEST on 12 May 2026, Treasurer Jim Chalmers’ 2026–27 Federal Budget announced the most significant rewrite of property taxation in a generation: from 1 July 2027, negative gearing is abolished for established residential dwellings acquired after Budget Night, with rental losses on those properties “quarantined” so they can only be offset against other residential property income, revenue gains and, ultimately, residential capital gains — never against salary and wages. Properties held (or under contract) before the Budget Night cutoff are grandfathered and may continue to be negatively geared until sold, new builds remain fully negatively gearable, and excluded entities such as superannuation funds (including SMSFs) and widely held trusts sit outside the regime entirely. The reforms were legislated with unusual speed: the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 was introduced on 28 May 2026 and passed both houses of Parliament on 25 June 2026, pairing the negative gearing changes with a broader CGT overhaul that includes a minimum 30 per cent tax rate on capital gains accruing on and after 1 July 2027.

For investors, the financial impact turns on mechanics that are easy to state but hard to compute by hand — which is precisely what this calculator models. Each year, deductions across quarantined dwellings (plus any carried-forward quarantined losses) are aggregated against their rental income; any excess is first absorbed by income from grandfathered dwellings and residential revenue gains, and the unabsorbed balance becomes the year’s Quarantined Amount. That amount then enters the revised seven-step CGT method statement in a fixed, non-optional order: after capital losses are applied, it reduces any Deferred Residential Capital Gain and then Residential Capital Gain — but critically, before the 50 per cent discount is applied to remaining deferred gains, which effectively halves the tax value of every dollar of quarantined loss compared with an ordinary deduction under the old law. Whatever cannot be used is locked away and carried forward, and if the investor’s marginal rate on post-1 July 2027 gains falls below the new 30 per cent floor, a Minimum Tax Gap Amount tops up the bill. The calculator traces each of these steps, showing exactly how much of a loss is used, deferred or devalued in a given year.