Understanding the justification

Is your landlord blaming the Budget?

Some landlords are citing the 2026–27 Federal Budget's negative gearing changes as a reason for raising rent. This page explains how those changes actually work, who they apply to, and what the timeline is — so you can understand the situation and ask informed questions.

Verify before acting

The facts below reflect the Budget as announced. This measure is subject to the passage of legislation and had not commenced at the time of writing. Check official sources — budget.gov.au and the ATO — for the current status before acting on this information. This page is general information only, not legal or tax advice. Last reviewed: 27 August 2026.

The key facts, briefly

The change was announced in the 2026–27 Federal Budget at 7:30pm AEST on 12 May 2026.
It does not commence until 1 July 2027 — and only if the relevant legislation passes Parliament.
Most existing landlords are unaffected. Any residential property owned before 7:30pm on 12 May 2026 keeps the current negative gearing rules, unchanged, for as long as that landlord owns it.
New builds are fully unaffected — they keep full negative gearing regardless of when they were purchased.
No landlord's tax position has actually changed yet because of this announcement.

Who is — and isn't — affected

The two columns below show the full picture at a glance.

Unaffected / unchanged

Owned before 12 May 2026

Negative gearing continues exactly as it does today, for as long as that landlord owns the property. Grandfathered until sold.
New builds — any purchase date

New build properties keep full negative gearing. The change does not affect them at all.
Nothing changes before 1 July 2027

Even for properties that are in scope, no tax change occurs until that date — at the earliest.
Not yet law

The change is still subject to legislation passing Parliament. Until it does, nothing has legally changed.

What changes (limited cases)

Established property bought after 7:30pm 12 May 2026

From 1 July 2027, rental losses on these properties can only be offset against rental income or capital gains from property — not against salary or other income. Excess losses carry forward to future years.
Grandfathering ends on sale

If a grandfathered property (bought before 12 May 2026) is sold after that date, the new owner does not inherit the grandfathered treatment. The incoming owner is subject to the new rules from 1 July 2027.

Note: A separate change to capital gains tax was also announced in the same Budget. See the Budget website and the ATO for details.

What is negative gearing, in plain English?

A property is negatively geared when the costs of owning it (mortgage interest, rates, maintenance, etc.) are more than the rent it earns. The landlord makes a loss on the property each year.

Under current rules, that loss can be deducted against any other income — including a salary — which reduces the landlord's overall tax bill. This is what makes negatively geared investment attractive despite the annual loss.

Under the announced change (for new purchases of established properties after 12 May 2026, from 1 July 2027), that loss can only be offset against rental income or property capital gains — not against a salary. The loss doesn't disappear; it carries forward and can be used in future years when there is rental income or a capital gain.

For a landlord with a property bought before the cut-off date, nothing about their tax treatment changes.

Quick check: does this change likely apply here?

Answer these two questions to understand whether the Budget change is likely to affect your landlord's situation. Your answers stay in your browser — nothing is stored or sent anywhere. This is information only, not advice about any specific landlord or tax situation.

1. Do you know when the property was first purchased by the current landlord?

What does this mean for your rent increase?

The Victorian rent increase assessment process looks at whether a rent increase is excessive given local market conditions and other factors — including the property's condition, location, and the landlord's costs. Tax arrangements are not one of the formally listed assessment factors.

That said, understanding whether the stated justification applies to your situation is useful: it helps you ask informed questions of your landlord or agent, and it helps you prepare if you decide to seek advice or apply for a free CAV assessment.

If you want to discuss your specific situation, contact Tenants Victoria for free advice.

Disclaimer & sources

This page is general information only. It is not legal advice, tax advice, or a determination about any individual tenancy or landlord. Laws and announced measures can change before or after commencement. Always verify current rules with official sources.

Last reviewed: 27 August 2026