Negative gearing changes: what Brisbane investors need to know

What is negative gearing?

Negative gearing occurs when the costs of owning an investment property, including mortgage interest, rates, insurance, property management fees and maintenance, exceed the rental income the property generates. The resulting loss can be deducted from your other income, including your salary, reducing your overall tax liability.

For decades this has been a cornerstone of Australian property investment strategy, particularly for higher income earners. Brisbane investors have used it extensively across the inner south, inner north and middle ring suburbs where rental yields are relatively low but capital growth has been strong.

What has the government changed?

The federal government has announced changes to the negative gearing framework as part of the 2025 Federal Budget, with measures taking effect progressively from 2026. The key changes are:

• Cap on deductible losses: Investors will face limits on the total amount of rental losses they can offset against their wage income in a single year. Losses above the cap can still be carried forward and offset against future rental income or a capital gain.
• New properties favoured: The government has signalled that concessions will be maintained or enhanced for newly constructed properties as part of the housing supply agenda. Existing property investors may face more restrictive treatment.
• CGT discount unchanged: The 50% capital gains tax discount for assets held more than 12 months remains in place despite earlier speculation of reform.

These changes are still being legislated. Investors should seek specific tax advice before making any decisions based on proposed measures.

What does this mean for Brisbane investors?

For investors who have held Brisbane properties for several years, the immediate impact may be limited, existing portfolios and existing loan structures are not retrospectively affected. The greater impact is on new purchasing decisions.

Investors who were planning to purchase additional negatively geared properties using high loan-to-value ratios may find the tax benefit reduced, changing the effective return profile of that strategy. The calculation that previously made negative gearing attractive, low yield now, high capital growth over time, with tax relief during the holding period, becomes less compelling when the annual tax relief is capped.

Inner Brisbane suburbs like Woolloongabba, West End and Annerley, where gross yields are typically 3.5 to 4.5 percent and properties are heavily negatively geared, could see softer investor demand if changes pass as proposed.

What stays the same?

• All existing deductions for investment properties remain intact, interest, depreciation, repairs, management fees and rates are all still deductible
• The 50% CGT discount for assets held more than 12 months is unchanged
• Positively geared properties are unaffected
• New construction appears to retain more favourable treatment under proposed concessions

Should you sell or hold?

The answer depends entirely on your individual tax position, your property's equity, its current market value relative to your cost base and your income level. A property that was purchased negatively geared five years ago at a lower price has likely built significant equity and may now be approaching neutral or positive gearing at today's rents.

For Brisbane investors considering whether to sell before any changes take full effect, the key variables are: what is the property worth now versus what you paid, what is your CGT exposure, and what does the income position look like over the next three to five years under the proposed rules.

An independent valuation is a sensible starting point. Knowing your current market value gives you the data you need to have a productive conversation with your accountant about whether a sale, hold or restructure makes the most sense for your situation.

The AML connection

Separately, new Anti-Money Laundering (AML) legislation affecting real estate professionals comes into force in Australia from 2026. This is covered in detail in our separate article on AML laws and what they mean for property transactions.