27/07/2026
๐ก๐ฒ๐ด๐ฎ๐๐ถ๐๐ฒ ๐๐ฒ๐ฎ๐ฟ๐ถ๐ป๐ด ๐๐ต๐ฎ๐ป๐ด๐ฒ๐: ๐๐ณ๐ณ๐ฒ๐ฐ๐ ๐ผ๐ป ๐๐ต๐ฒ ๐ ๐ฎ๐ฟ๐ธ๐ฒ๐
๐๐ผ๐๐ด๐ต๐ ๐ฎ๐ป ๐ถ๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐ฝ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐ ๐ฏ๐ฒ๐ณ๐ผ๐ฟ๐ฒ ๐ญ๐ฎ ๐ ๐ฎ๐ ๐ฎ๐ฌ๐ฎ๐ฒ? ๐ง๐ต๐ฒ ๐๐๐ฟ๐ฝ๐ฟ๐ถ๐๐ฒ ๐ฒ๐ณ๐ณ๐ฒ๐ฐ๐ ๐น๐๐ฟ๐ธ๐ถ๐ป๐ด ๐ถ๐ป ๐๐ต๐ฒ ๐ฏ๐ฎ๐ฐ๐ธ๐ด๐ฟ๐ผ๐๐ป๐ฑ
Everyone has heard about the negative gearing changes, and how this has all been designed to help new, first-time home owners in order to help them with lower demand. As usual, the effect is not just limited to the tax effect. There is a knock-on effect to how much you can borrow as someone with an investment property. It has just made the landscape more complex.
We recently modelled a real client scenario to demonstrate the effect of the negative gearing tax changes to borrowing money. A couple earning $400k combined were looking to buy a $1.3m investment property and refinance $1.3m in existing loans. Total loan required: $2.665m.
Before the negative gearing changes, both a major bank and a non-bank lender had more than enough capacity to approve it - the loans were between $2.785m and $2.816m.
After 12 May 2026, with negative gearing no longer counted in the servicing assessment for new investment property purchases, that capacity dropped to between $2.353m and $2.6125m, which means either the client is now short with a major bank, or, even at a non-bank lender's higher interest rate, the loan still falls short of what is required.
Like some of the ads on TV - Same income. Same expenses. Same rent. Compare the pair. On these numbers, neither lender can provide sufficient funds to complete purchase.
That's a swing of around 16% in borrowing power, purely from a change in policy - not a change in your finances. That means many clients who were looking to buy an investment property now, in order to plan out their future, may need to rethink their approach.
๐ ๐ณ๐ฒ๐ ๐๐ต๐ถ๐ป๐ด๐ ๐๐ผ๐ฟ๐๐ต ๐ธ๐ป๐ผ๐๐ถ๐ป๐ด:
โ Property bought before 12 May 2026? No change to your existing loans. This may also change the way that you may want to consider your new purchase. It may be that you purchase a new property to live in, and then you rent out your old property. But, this needs more tax advice and assistance in the way that this is structured so that you don't miss out on the tax deductions for your existing property. You may want to review our previous article on structuring of your home loans.
โ Buying a new build? Negative gearing is preserved either way.
โ Buying an existing investment property from here? Your borrowing capacity for servicing purposes could take a real hit - and which lender you use now matters more than ever.
If you're planning your next purchase, or have an application sitting in a lender's pipeline, get in touch before you go further - it could be the difference between a deal that stacks up and one that doesn't.
Understanding the new investment property servicing rules effective 12 May 2026, and what they could mean for your next purchase. What Has Changed Following the negative gearing legislation that took effect on 12 May 2026, lenders have updated how they assess borrowing capacity for investment proper...
