Grandfathered, New Build or Established: The Three Property Tax Classes of 2026

Why 12 May 2026 became the dividing line

Two questions now decide a property's tax treatment: when was it purchased or contracted, and is it a new build? Anything owned or contracted before 12 May 2026 is grandfathered — the old rules travel with it. For purchases or contracts from that date onward, the property is either a new build, which keeps full negative gearing, or an established dwelling, which does not.

The date is a hard line, not a phase-in. A contract signed the day before the Budget sits in a different tax class from an identical one signed the day after.

Grandfathered properties: the old rules keep applying

If you owned or had contracted a property before 12 May 2026, its negative gearing and CGT treatment does not change. Rental losses remain deductible against other income under the old negative gearing rules, and when the CGT changes arrive on 1 July 2027, grandfathered holdings keep the old rules there too.

A point that is easy to miss: grandfathering attaches to the current holding, not the address. If a grandfathered established property is sold after 12 May 2026, the buyer starts fresh — for them it is an established post-budget purchase, with quarantined losses. That asymmetry matters when weighing whether to hold or sell a grandfathered asset.

New builds: the only class with full negative gearing

For properties purchased or contracted from 12 May 2026 onward, rental losses are deductible against salary and other income only if the property is a new build. New builds also retain concessional CGT treatment when the flat 50% discount is replaced from 1 July 2027.

Depreciation reinforces the divide. Division 43 capital works deductions run at 2.5% per year straight-line over 40 years for residential buildings constructed after 15 September 1987 — so a brand-new building has the full 40-year runway ahead of it. And since 2017, Division 40 plant and equipment deductions on second-hand residential plant have been restricted, broadly to new plant only. A new build is the one class where both divisions do their heaviest work, which is why Plintha's depreciation modelling reads the building's physical age rather than assuming a generic schedule.

Established post-budget: losses quarantined, not lost

An established property bought after 12 May 2026 cannot use rental losses against salary. Instead, losses are quarantined — carried forward and applied against future rental profits, or against the eventual capital gain when the property is sold.

The deduction is deferred rather than destroyed, but the timing shift changes the cashflow picture materially: there is no annual tax offset propping up a loss-making year. From 1 July 2027, these properties also face the new CGT regime, where the flat 50% discount gives way to indexation-based treatment with an effective minimum of 30%. An established post-budget purchase has to stand up on its pre-tax numbers in a way the other two classes do not.

How Plintha classifies a listing

Every Plintha analysis classifies the property as grandfathered, new build, or established post-budget, because the class changes the tax modelling that follows — negative gearing treatment, CGT assumptions and depreciation all hang off it.

The property is also scored through two strategy lenses, Yield and Growth, and given a verdict — Meets Criteria, Conditional, or Below Criteria — with a 0–100 score. Every figure in the report carries provenance — computed, [ESTIMATE] with the assumption shown, or [ASSUMED] from an overridable default — so you can see exactly which inputs the analysis rests on. The free tier includes one analysis per month, with no card required.

Common questions