Will New Builds Sell Better After the Negative Gearing Change
Negative Gearing and New-Build Demand | Switchboard Finance
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Negative Gearing · New Builds · Buyer Demand
Will New Builds Sell Better After the Negative Gearing Change
The Budget keeps negative gearing on new builds while winding it back elsewhere. For a builder, the new-build carve-out is a demand signal, not a tax tip. It shapes who your finished stock sells to, and how you fund the wait while presales firm.
Quick Answer
After the Budget's new-build carve-out, negative gearing points investor demand toward newly built dwellings. For a builder, that is a demand signal, not a tax tip: it shapes who your finished stock sells to. A flexible private lending facility can hold the line while presales firm.
Do new builds still get negative gearing?
New builds still attract negative gearing under the announced reforms, which is the opposite of what many builders assume when they hear the headline. The change tightens negative gearing on established dwellings, but it carves out newly built homes and keeps the concession on them. That is the new-build carve-out, and it is the whole reason this Budget item reads as a tailwind for finished stock rather than a threat to it.
The detail sits on the ATO new-legislation page: from 1 July 2027 negative gearing is limited to new builds, and properties held at 7:30pm AEST on 12 May 2026 are exempt from the change. It is not yet law, present settings indicative, so treat the timing as announced policy rather than a settled rule. The signal for a builder is not in the tax mechanics. It is in where the concession survives, because that is where investor appetite concentrates.
Where the new-build carve-out steers end-buyer demand
Where end-buyer demand is steered is the part that matters for your sell-down. When negative gearing is retained only on new builds, the investors who rely on that deduction have one efficient place to put their money, and that is newly built dwellings. The owner-occupier who was never negatively gearing does not change behaviour. The investor does, and that is what this does to the buyer pool: it concentrates the tax-motivated buyer onto new stock across the construction lane.
So this is a demand signal, not a tax tip. You are not being asked to restructure anything or chase a deduction yourself. You are reading a shift in who lines up for a finished new dwelling. From the underwriter's seat, that shift is what gives a presale or an end-sale its evidence, and a redirected buyer pool is a thicker buyer pool for the exact product you build. Where it lands depends on local depth, which is why the signal helps in some places and barely moves others.
Where the demand signal works
- Newly built dwellings that suit investor buyers
- Stock completed and marketable under the new-build settings
- Locations with genuine depth of investor demand
- A presales story you can actually show a lender
Where it stalls
- Established or substantially renovated stock, where the carve-out does not apply
- Product aimed only at owner-occupiers, where the deduction is irrelevant
- Thin local markets, where redirected demand is still thin
- Assuming the rule is settled before it is law
What a redirected buyer pool means for your sell-down
A sell-down into a redirected buyer pool is easier to plan for than a sell-down into a flat one, but the timing rarely lines up with your cash. The carve-out shapes who buys; it does not advance the day they settle. You still finish, you still market, and you still wait for presales to convert, often well after the build account has done its job. A clean development approval and a credible presales story remain the evidence a lender weighs, carve-out or not.
This is where the funding question is purely about holding the line, not positioning the project. A flexible private facility while presales firm, varies by lender, can hold the position between practical completion and the settlements that clear it, secured against the asset you have just built. It is short, it is exit-driven, and it buys you the room to build for the buyers who keep the concession without discounting finished stock to force an early sale. Where the deal needs more than a short hold, development finance or the structuring in our construction loan pack is the conversation, and a broker can map the exit before you commit, the way we walk it through in how development finance works.
The negative gearing change reads as a threat only if you stop at the headline. Underneath it sits the new-build carve-out, which keeps the concession on newly built dwellings and steers the tax-motivated buyer toward exactly the stock a builder produces. That is a demand signal, not a tax tip, and the present settings are not yet law, so read it as announced policy and build accordingly. The financing job is simply to hold finished stock while a redirected buyer pool converts.
Key takeaway: Treat the carve-out as a buyer-demand signal for new stock, and line up a short, exit-driven facility to hold the wait while presales firm.Frequently Asked Questions
New builds still get negative gearing under the announced reforms, while it is wound back on established dwellings. The Budget limits negative gearing to newly built homes from 1 July 2027, which is the new-build carve-out at the centre of this change. Because the measure is not yet law, treat it as announced policy, and read more on funding new stock in our private lending glossary entry.
The negative gearing change is slated to start from 1 July 2027 under the announced bills, with properties held at 7:30pm AEST on 12 May 2026 exempt from the change. It is not yet law, so the start date is the policy position rather than a settled rule. A builder planning a development exit around that window should map the timing with a broker rather than assume it, starting from what development finance actually covers.
Whether the change makes new builds easier to sell depends on demand depth in your location, but the direction is supportive, because the carve-out steers tax-motivated investors toward new stock. That is a demand signal, not a guarantee, and thin markets stay thin. For property-secured funding while presales firm, see our guide to private lending secured by property.
The capital gains tax change applies to individuals, trusts and partnerships, replacing the 50% capital gains tax discount with cost-base indexation and a new minimum tax rate on gains accruing after 1 July 2027. It sits alongside the negative gearing reform but is a separate mechanic, and like the rest of the package it is not yet law. A builder selling finished stock should read both through a development approval and exit lens with a broker.
A builder can fund new stock while presales firm with a short, property-secured facility that is built around the exit rather than long-term cash flow. A flexible private facility, varies by lender, holds finished dwellings between practical completion and settlement without forcing a discount. Compare the broker and direct routes in our first commercial property move guide before you choose.
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