Investment Property in 2026: What the Negative Gearing Cut-Off and APRA’s New Rules Mean for You

Three calls in the past week from investment property clients, all asking a version of the same question: “Does the budget change affect me?” The answer depends on exactly when you bought — or plan to buy — and what type of property you’re looking at.

Two major changes have reshaped the investment lending landscape in 2026. Here is a plain-language breakdown of what has changed, who it affects, and what steps you could consider taking next.

What’s Happening

Change 1 — The Federal Budget: Negative Gearing Cut-Off Date

On 12 May 2026, the Federal Government’s Budget announced that negative gearing for residential properties will be restricted to new builds for contracts signed after 12 May 2026 at 7:30pm AEST. These changes take effect from 1 July 2027, but the eligibility cut-off date has already passed. (Australian Government, Budget 2026–27)

In practical terms: if you purchased an established residential property after that budget announcement, you will not be able to use negative gearing to offset rental losses against your salary or other income from 1 July 2027. The key phrase is “established property” — meaning an existing home, not a new build.

Lenders are already acting on this. Suncorp Bank updated its serviceability calculator in June 2026 to require brokers to flag whether an investment property is eligible for negative gearing. Other lenders are following suit. (Suncorp Bank, June 2026)

Change 2 — APRA’s Debt-to-Income Cap

From 1 February 2026, APRA introduced a rule limiting residential mortgage lending at a debt-to-income (DTI) ratio of six times income or higher to no more than 20% of all new mortgage lending across authorised deposit-taking institutions. (APRA, February 2026)

Property investors — who often carry multiple mortgages and have higher total debt levels — are among the borrowers most likely to feel this restriction. Roughly 40% of investors are now reporting difficulty accessing lending through traditional banks, according to recent industry reporting (June 2026), with non-bank lenders stepping in as an alternative for eligible borrowers.

It is worth noting that non-bank lenders are not subject to APRA’s DTI cap, which means options may still exist — depending on your circumstances and the lender’s own credit policies.

What Does This Mean for You?

You already own investment property

If you purchased before 12 May 2026 (7:30pm AEST), you are grandfathered under the existing negative gearing rules. These changes do not apply retroactively. Your current arrangements remain intact, subject to any further legislative changes.

You’re buying a new build

New builds remain eligible for negative gearing regardless of when you purchase. If you’re considering entering the investment market, a new build — whether house-and-land, off-the-plan apartment, or new construction — could mean different tax treatment compared to buying an established home. Whether this makes financial sense depends on your personal situation, so it’s worth discussing with your accountant and broker.

You signed a contract on an established property after 12 May 2026

From 1 July 2027, you will not be able to offset rental losses against your income under the existing negative gearing rules. This may affect your overall return on investment, depending on your circumstances. Lenders are also updating how they assess serviceability for these properties, which could influence your borrowing power with certain banks.

You’re close to or above a 6× debt-to-income ratio

If your total debt is more than six times your income, you may encounter more resistance from major banks — not necessarily because you cannot service the loan, but because of APRA’s portfolio-level cap. That said, each lender applies these rules slightly differently, and non-bank lenders operate outside this particular constraint. A broker can compare your options across the full market, including non-bank alternatives.

What to Do Next

• Confirm your contract date. If you have recently purchased or are under contract, confirm whether you’re above or below the 12 May 2026 7:30pm AEST threshold. Keep documentation of your signed contract date.
• Talk to your accountant. The difference between negative gearing eligibility and non-eligibility may materially affect the return on an investment property, depending on your income level and rental yield. Get advice specific to your circumstances.
• Get a current borrowing power assessment. With APRA’s DTI cap in place, your borrowing capacity can vary significantly from lender to lender. A broker can run scenarios across bank and non-bank lenders to find what may be achievable, subject to your situation.
• Don’t rush a decision. The investment property market is adjusting, and lenders are still updating their policies. Taking time to understand your position before committing to a purchase is almost always worthwhile.

Talk to Finance Hub

At Finance Hub, we work with investors across Sydney and Australia — from first-time buyers adding an investment property to experienced portfolio builders managing multiple loans. We understand how APRA’s DTI rules and the budget’s negative gearing changes interact, and we can help you assess your specific position.

If you’d like to understand your current borrowing capacity, explore whether a particular property strategy could still work under the new rules, or simply get a clear picture of where you stand, we’re happy to have that conversation.

Call or text 0430 11 11 88 or email daniel@finhub.net.au.

Finance Hub and Networks Pty Ltd | ACL 573164 | This is general information only and does not constitute financial advice. Outcomes depend on your individual financial circumstances and are subject to lender assessment. Conditions apply.