<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A loophole in the </span><a href="https://www.9news.com.au/politics" rel="" target="" title="federal government"><span>federal government</span></a><span>'s move to abolish negative gearing will allow millions of Australians who currently own their own home to continue to access the tax breaks after July 2027.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Treasurer Jim Chalmers last week announced the </span><a href="https://www.9news.com.au/tax" rel="" target="" title="major tax reforms"><span>major tax reforms</span></a><span> as part of the federal budget, which include winding back the tax concession for property investors from July next year in an effort to help younger </span><a href="https://www.9news.com.au/australia" rel="" target="" title="Australians"><span>Australians</span></a><span> trying to enter the </span><a href="https://www.9news.com.au/housing" rel="" target="" title="housing market"><span>housing market</span></a><span>.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Until now, any homeowner was able to deduct a net loss from a residential investment property from their overall income, thereby reducing their yearly tax bill.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>WORLD:</span></strong><span> </span><a href="https://www.9news.com.au/world/ebola-outbreak-who-declares-global-health-emergency-over-outbreak-in-congo-and-uganda/ff09de90-acae-434b-a102-87eea224d46f" target="_blank"><strong><span>Health experts 'very alarmed' as deadly virus breaks containment</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>From July 2027, that will only apply to new build homes, superannuation funds and those who purchased their properties prior to budget night.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A spokesperson for Chalmers has now confirmed to the Australian Financial Review (AFR) that those property purchases also include owner-occupiers.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>This means that Australians who currently own their home bought before budget night could later purchase another property and convert their current home into a negatively geared investment.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/negative-gearing-loophole-for-millions-of-owner-occupiers-could-discourage-selling/f5adfe31-3500-474b-a6e7-8d50a4023a79" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>KPMG chief economist Brendan Rynne told the AFR the grandfathering arrangements would mean existing owners of both investment properties and owner-occupied homes would be more likely to hold on to their properties so they could retain the option to negatively gear.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>LIVE UPDATES:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-politics-live-updates-donald-trump-iran-deal-may-18-iran-israel-middle-east-war-blog-rolling-updates/d6095f36-8d4c-426c-894f-cb7c5216861c" target="_blank"><strong><span>Senator says Trump 'stupid enough' to fight Israel's war</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"What that's going to mean is that that housing turnover is probably going to be a bit less than what we've seen in history," Rynne said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>It's thought that defining investment property status in legislation would have been prohibitively complex, so the loophole was likely deemed a necessary part of simplifying the reforms.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The impact of the changes to negative gearing and Capital Gains Tax (CGT) were </span><a href="https://www.9news.com.au/national/budget-property-rules-negative-gearing/ae8f96d1-b31e-49d6-9290-ef72b868c346" rel="" target="" title="put to the test for the first time at Saturday auctions"><span>put to the test for the first time at Saturday auctions</span></a><span> on the weekend, with some prospective buyers saying they had already noticed a shift in the market.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/budget-property-rules-negative-gearing/ae8f96d1-b31e-49d6-9290-ef72b868c346" rel="" target="" title="Negative gearing change put to test in Saturday auctions"><strong><span>Negative gearing change put to test in Saturday auctions</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><h2><span>The negative gearing exemptions may seem friendly. One property expert warns it's a' trap'</span></h2></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The friendly tax exemption which still allows newly-built homes to be </span><a href="https://www.9news.com.au/national/federal-budget-2026-changes-to-negative-gearing-capital-gains-tax-discount-explained/0a2e7bcf-5c7b-42bc-88d1-788c34aa9eb2" rel="" target="_blank" title="negatively geared"><span>negatively geared</span></a><span> may be a "trap" for inexperienced investors, a property expert has explained.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>While negative gearing will be abolished from July next year for established properties bought after the </span><a href="https://www.9news.com.au/national/federal-budget-2026-nightmare-scenario-for-australians-if-middle-east-war-continues/886d30df-d354-4f3d-a538-498595984a98" rel="" target="_blank" title="2026 Federal Budget"><span>2026 Federal Budget</span></a><span>, investors who purchase brand-new homes can still offset any net losses from their yearly taxable income.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>This could inspire new investors to buy into sprawling apartment developments or house-and-land packages on the outskirts of major cities – but these types of properties historically "underperform" as investments.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/federal-budget-2026-boost-juice-founder-lashes-federal-budget/be5899df-8057-4d61-a06f-828bb1430f73" target="_blank"><strong><span>Boost Juice founder lashes budget tax reform</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>EXCLUSIVE: </span></strong><a href="https://www.9news.com.au/national/british-expat-why-she-moved-back-to-australia-after-returning-to-england/75109d3d-f00d-416b-bbd3-fdae6d0ca001" target="_blank" title="Expat Annie decided to move back to the UK. She lasted just six months"><strong><span>Expat Annie decided to move back to the UK. She lasted just six months</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Property investment guru and Your Empire chief executive Chris Gray said the federal government's new build exemption may "screw investors" who buy solely based on their freedom to apply negative gearing.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"These massive towers in Docklands in Melbourne or Zetland in Sydney, or the thousands and thousands of blocks of land where all the properties are the same, there is not necessarily lots of natural demand and typically they don't grow in value," Gray told </span><a href="https://www.nine.com.au/?rf=true" rel="" target="_blank" title="Nine.com.au."><span>Nine.com.au.</span></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's basic economics. If something's in short supply and lots of people want it, the price goes up. Where you've got lots of supply, it won't."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>First-time Australian investors who weren't lucky enough to buy before 7.30pm on budget night now have two choices: buy a newly-built home for the negative gearing benefit, or lose the tax break and buy an existing property.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Gray, who has 30 years of experience buying and selling property, said seasoned investors will know to give new builds a wide berth.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>He would still choose the option of buying a second-hand home in a high demand area, despite the chance it won't be positively geared for at least a decade.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Some inexperienced buyers, however, could still be fooled by something called "manufactured capital growth".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>And it could take years before the reality of their bad investment sinks in.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Developers might sell 20 at a time and slowly release them. They sell the first lot at say $500,000 and the next one at $525,000 and then $550,000," Gray added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Everyone thinks that it's rising, but it's not.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It's not until you get someone selling it to another person in maybe five years' time that you actually realise, potentially, the property hasn't grown in value at all."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="_blank"><strong><em><span>Apple</span></em></strong></a><span> </span><strong><em><span>and</span></em></strong><span> </span><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" target="_blank"><strong><em><span>Google Play</span></em></strong></a></li><li><strong><em><span>Make 9News your preferred source on Google by</span></em></strong><span> </span><a href="https://9.nine.com.au/8x987w" target="_blank"><strong><em><span>ticking this box here</span></em></strong></a></li><li><strong><em><span>Sign up to</span></em></strong><span> </span><a href="https://login.nine.com.au/edm?client_id=nineatnine" target="_blank"><strong><em><span>our breaking newsletter here</span></em></strong></a></li></ul></div></div>