Will Negative Gearing Changes Push Investors Toward New Builds?
13 May, 2026
Updated: 13 May, 2026
The primary question most investors ask is whether they should buy an established property or build a new one. For a long time, many investors have leaned toward established homes.
And the logic is simple: established properties are often in proven suburbs with better land appreciation, and they attract stronger rental demand.
But after the Federal Government’s proposed 2026 tax reforms around negative gearing and capital gains tax, the equation may have changed significantly.
The result was, well, surprising. And in this blog, we are going to break it down for you.
How Do Established Properties And New Builds Compare Over 10 Years?
Home Loan Experts mortgage broker Jonathan Preston looked at two investment properties:
- a $1 million established property
- a $1 million new build
Both were assumed to grow at 7% per annum over 10 years.
| Item | Established Property | New Build |
|---|---|---|
| Purchase price | $1,000,000 | $1,000,000 |
| Loan amount | $800,000 | $800,000 |
| Rental yield | 3.5% | 3.0% |
| Maintenance cost | Ongoing upkeep | No maintenance assumed |
| Negative gearing benefit | Reduced under proposed rules | Available for full 10 years |
| CGT treatment | Less favourable under proposed rules | Keeps 50% CGT discount |
| Total rent over 10 years | $484,576 | $415,351 |
| Total after-tax cash flow | -$48,869 | +$14,582 |
| CGT payable at sale | $379,933 | $262,531 |
| Net profit after tax | $538,349 | $719,202 |
| Final wealth from $200k equity | $738,349 | $919,202 |
So, is buying an established property a better option?
At first, the established property looked like the obvious winner. However, there’s more to it.
The established property did collect more rent over the 10 years. In fact, it brought in about $69,000 more rental income than the new build. But rent is only one part of the story. The established property also had higher ongoing costs, less favourable tax treatment, and a bigger capital gains tax bill at the end.
The new build, on the other hand, had a lower rental yield but benefited from stronger tax advantages. It also avoided the maintenance drag that often comes with older properties.
So even though the new build collected less rent, it finished ahead overall.
What Did Jonathan Preston’s 10-Year Modelling Reveal?
After 10 years, the new build was worth $180,853 more. That is the key point. The established property won on rent but the new build won on after-tax wealth. And for most investors, that second number can matter more.
Does this mean new builds are always better?
No, this does not mean every investor should rush out and buy a new build. Established properties can still perform very well, especially if they are in strong locations, have better land value, or offer renovation potential.
A well-bought established property in a high-growth area can still beat a poorly chosen new build. But this modelling shows something important. Investors should not only look at rental yield or suburb reputation. They also need to look at how much money they actually keep after tax, expenses, and sale costs.
Why could the rules change the conversation?
Under the proposed tax changes, new builds may keep important benefits that established properties may lose. That includes access to negative gearing and more favourable capital gains tax treatment.
For investors, this could make new builds more attractive than they used to be, especially when comparing two properties with similar growth potential.
Should You Invest In An Established Property Or A New Build?
Most investors focus on how much a property might grow, but growth is only part of the picture. What matters just as much is how much wealth remains after rent, expenses, tax and sale costs are taken into account. In our modelling, the new build came out ahead because it was more tax-efficient and had lower ongoing cost.
Final Words
The best investment property is not always the one that looks strongest on the surface. Instead, it’s the one that quietly works harder in the background. This is why as an investor, you should compare the full picture before deciding between an established property and a new build.
And if you want to get a detailed picture of whether it’d make sense to go with an established property or invest in a new build, call us on 1300 889 743 or enquire online today.
