New builds and depreciation: the advantage right now

For years, new builds have quietly been the more tax-effective way to invest in residential property. After the 2026–27 Federal Budget, that quiet advantage has become the headline — and there's a window here worth understanding, whether you're already investing or thinking about your first step.

A rare alignment of the rules

Two separate parts of the tax system now point in exactly the same direction. The first is depreciation: because a new build lets the first investor claim both the capital-works deductions on the structure and the plant-and-equipment deductions on the fittings, it delivers materially larger deductions than a typical established home — especially in the early years. (We unpack the mechanics in Why new builds unlock bigger tax deductions.)

The second is the Budget's negative gearing and capital gains tax reform. From 1 July 2027, established homes lose the ability to negatively gear against wages and the 50% CGT discount is replaced with indexation plus a 30% minimum rate — but new builds are exempt, keeping negative gearing and a choice of CGT method. For the first time in a long time, the depreciation rules and the broader tax settings reward the same choice.

Understanding the window

The changes take effect on 1 July 2027. Anything you already owned at 7:30pm on 12 May 2026 is grandfathered and keeps today's rules. An established property bought after that night keeps full negative gearing only until 30 June 2027. New builds remain the ongoing exception on the other side of the change. The practical takeaway is simple: any decision made from here is best made with the post-2027 world in mind, and a well-chosen new build is positioned for that world rather than against it.

Why "right now" matters beyond the tax

The Budget also put real weight behind new supply — funding for the infrastructure that unlocks new housing, continued limits on foreign buyers of established homes, and staged personal tax cuts that lift household cash flow. Those are helpful tailwinds. But the more important point is a timeless one: the earlier a disciplined plan is put in place, the longer compounding growth and steady debt reduction have to work in your favour. A few years of a head start on the mortgage on your own home can be worth far more than trying to pick the perfect moment to buy.

But don't let the calendar make the decision

A window is a prompt, not a push. The worst reason to buy a property is to beat a date, and the tax advantages only matter if the underlying investment stacks up on its own — the right property, in the right location, at a price and structure that suit your goals and your borrowing capacity. Use the current clarity as a reason to run the numbers properly, not a reason to skip the diligence.

How we help you weigh it up

This is exactly the kind of decision we model with clients: how a specific new build would flow through your cash position after depreciation and tax, how the freed-up cash could accelerate the debt on your own home, and what that means for the age at which you could comfortably step back from work. Property is one tool in that plan — a powerful one when it's the right fit, and easy to get wrong without a clear-eyed look at the whole picture. If the new rules have you wondering where you stand, that's a good conversation to have.

This article is general information only, current as at mid-2026, and doesn't take your personal circumstances into account. Tax settings can change as legislation is finalised. Please confirm current details and seek personal advice before acting.