New Build vs Established at $750,000: A $290-a-Week Gap From July 2027

$290 a week. That is how much more cash an established house takes to hold than a new build at the same $750,000 price, the same $600-a-week rent and the same loan in this worked example, when both are bought today and the rules that start on 1 July 2027 apply.

From 1 July 2027 the new build costs $128 a week after tax and the established house costs $418. Until then the gap is smaller, $89 a week. Almost all of the difference is one thing: the tax saving against salary that the new build keeps and the established house has deferred.

Every figure here comes from Plintha's deterministic finance engine, the same code behind every analysis on this site. The exact inputs are published alongside this post so anyone can re-run them.

What the engine can and can't put a number on

This post covers the year-one cost of holding each house, after income tax, shown per week and per year. It does not project those figures across a multi-year hold, because rent, interest rates, depreciation and land tax all move over time. It does not cover tax on the eventual sale either: Plintha's engine does not calculate capital gains tax, so no sale-day figure appears below.

The rules behind the gap

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 passed the Senate on 25 June 2026 (Baker McKenzie summary). Two parts matter for this comparison, and both apply only from 1 July 2027:

• Rental losses. For an established dwelling acquired after 7:30pm AEST on 12 May 2026, a net rental loss can only be deducted against income from residential dwellings, including capital gains on them, and any excess is carried forward. It no longer reduces tax on salary. New builds, and anything held before the cut-off, keep the salary offset (Treasury media release).
• Capital gains. This change is not tied to the 12 May 2026 cut-off and applies to all assets. Gains that accrue before 1 July 2027 keep the 50% discount. Gains that accrue from that date get cost-base indexation, with a 30% minimum tax on real gains. Investors in new builds can choose between the 50% discount and the new arrangements.

Depreciation is older law, but it adds to the difference. A brand-new house carries both capital works (Division 43) and plant and equipment (Division 40) deductions. A second-hand house bought since 2017 gets capital works only, because the ATO does not allow a deduction for second-hand depreciating assets in a residential rental.

The setup

Two houses in Victoria, both bought after the Budget cut-off:

• Price: $750,000 each
• Rent: $600 a week ($31,200 a year, a 4.16% gross yield)
• Loan: 80% LVR, $600,000, interest-only at 6.75% (an illustrative investor rate, not a quote)
• Deposit: $150,000
• Marginal tax rate: 37%

The engine treats the two houses as physically different assets even at the same price. The new build has more of its value in the building and less in the land, which raises depreciation, lowers modelled maintenance and lowers the land tax estimate.

The year-one numbers

These are year-one figures at today's rent, rate and costs. They are not a forecast of later years.

Where the $290 a week comes from

Before tax, the two houses are close. The established one costs $29 a week more, and that is almost entirely maintenance: the engine models $3,150 a year on the older building against $1,650 on the new one, a $1,500 difference.

After tax, from 1 July 2027, they are far apart: $128 against $418, a gap of $290 a week.

The new build runs a large loss on paper, helped by $16,500 of depreciation that costs no cash. Because that loss still offsets salary, the engine's weekly cost falls by $261, from $389 to $128.

The established house runs a loss too: $28,295 in year one, including its $6,563 of depreciation. From 1 July 2027 none of that reduces tax on salary. The before-tax and after-tax figures are both $418.

Over a year, the weekly difference is $15,080. Land tax adds a little more. The established house's larger land share lifts the engine's estimate to $1,913 a year against $1,463, which is $450 a year more and brings the annual gap to $15,530. Land tax is shown here before any deduction.

The loss isn't gone, it's deferred

The established house's losses are not cancelled. They carry forward, and they can be used against later income from residential property, including a capital gain when a residential property is sold.

At a 37% rate, the year-one loss of $28,295 represents up to $10,469 of tax saving that is deferred, not lost. That is most of the $15,080 annual gap. If the losses are eventually absorbed, for example by a gain on sale, much of the gap turns out to be a timing difference: the new-build investor gets the saving each year, and the established-house investor gets it later, with no interest for the wait.

Whether and when that happens depends on future rent and on a sale that hasn't happened, so $10,469 is an upper limit for year one, not a forecast. What the table shows is the cash that has to be found each week in the meantime.

The timing detail for a purchase made now

Quarantining starts on 1 July 2027, not on settlement. Until 30 June 2027, an established house bought after the cut-off still gets the salary offset. On the engine's numbers its weekly cost in that period is $217, and the gap to the new build is $89 a week, not $290.

What these numbers don't cover

• Tax on sale. Not modelled. Both houses keep the 50% discount on any gain that accrues before 1 July 2027. For gains from that date, the new-build investor can choose between the 50% discount and the new arrangements, while the established house falls under indexation and the 30% minimum. That could widen or narrow the gap, and the carried-forward losses interact with it.
• Growth. Not modelled here, and it may matter more than the weekly cost. Land tends to appreciate and buildings wear out, and the new build has less land for the same money. A difference in growth between the two houses could outweigh the holding-cost gap in either direction.
• Depreciation falls over time. The engine uses a first-year figure. Plant and equipment deductions shrink each year, so the new build's tax saving would be smaller in later years than $128 a week implies.
• Rent, rates and land values move. Rising rent shrinks both houses' losses, and with them the gap. An interest-only period usually ends before a long hold does, and land tax rises with land value.
• One scenario. These results are for one price, one rent, one loan and one tax bracket in Victoria. A different rent, deposit or marginal rate changes the gap, and a property that is positively geared is not affected by the loss rule at all.
• Duty on a house-and-land package. We modelled duty on the full price for both. A package with a separate land contract is usually assessed differently.

None of this says a new build is the better asset. It says that at the same price the two now carry very different weekly commitments, and the size of that difference depends on the rent, the loan and the tax bracket. To see it for a specific property, you can run the numbers through Plintha.

This article is general information, not financial, tax, credit or legal advice. It doesn't take into account your objectives, financial situation or needs. Figures use Plintha's engine with the assumptions stated above (80% LVR, interest-only at 6.75%, 37% marginal rate, Victorian duty and land tax, standard operating-cost model) as at 5 October 2026 and will change if any of those inputs change. Check your own position with a licensed tax agent or financial adviser before acting.