Grandfathering and negative gearing: what it means for investors
"Grandfathering" is a policy term that means existing arrangements are exempted from new rules. In the context of negative gearing, grandfathering would mean that investors who already own properties under the current system would not be affected if the rules changed — they would keep their existing tax treatment.
How grandfathering is expected to work
Under widely reported proposals, any changes to negative gearing would apply only to properties purchased after the change takes effect. Properties owned before that date would continue to be negatively geared under the current rules indefinitely.
This means:
- Existing property owners would continue to offset net rental losses against other income (salary, business income) at their full marginal rate
- New property purchases after the commencement date might face restrictions — depending on the final policy design
- The cut-off date is what the industry calls the "grandfathering date"
Why grandfathering matters
Without grandfathering, a sudden change to negative gearing rules would severely impact the value of existing investment properties as investors priced in the loss of future tax benefits. Grandfathering protects:
- Current investors' after-tax returns
- Property values (by avoiding a sudden investor selloff)
- The expectations of people who made investment decisions based on current rules
What is not yet confirmed
As of mid-2026, the precise scope and commencement of any negative gearing changes has not been legislated. The reporting suggests grandfathering for existing properties, but:
- The exact cut-off date is unknown
- Whether the grandfathering applies to just the property or also to subsequent loans drawn on the same property is unclear
- How ownership changes (refinancing, transfer) interact with grandfathering has not been confirmed
What investors should do now
- Monitor policy announcements closely
- Speak to a tax advisor about your specific portfolio
- Consider the potential effect on new purchases you are planning
- Do not assume you need to sell existing properties — grandfathering is expected to protect them