For decades, 83% of Australian investors bought established. The 2026 federal budget made that the wrong answer overnight. Below: two properties, same $750,000 price, same suburb, same rent — one new, one established — and exactly what the tax code now does to each.
You've got $750k. Your parents bought established and made $1M. Your accountant says new build for depreciation. The 2026 federal budget changed which path keeps the tax shelters — and which one loses them. Three voices, one decision. Here's the structural answer.
Bought after 12 May 2026: losses are quarantined — no offset against your salary, refunds deferred for years. At sale, locked into CPI indexation with a 30% minimum tax. No depreciation to speak of.
Full negative gearing against salary preserved. ~$14k Year-1 depreciation. Duty on land only ($11.7k vs $26.8k). At sale, your choice of the 50% discount or indexation. The only investor lane the budget kept open.
Logan corridor, QLD. Same beds, same baths, same garage — we even give both the same $670/wk rent, so the only thing left to compare is what the rules do to your money.
Established pays duty on the full $750k: $26,775. New pays duty on the land only: $11,725. That's $15,050 kept before you collect a dollar of rent.
Same rent, same loan. New holds at $138/wk after the depreciation refund lands against your salary. Established holds at $368/wk — no depreciation, refund quarantined. $230/wk · ~$12,000 a year.
A Realtyex client — allied health professional, first property — signed a wholesale new build in the Logan corridor in January 2025 at $708,017 (land $365,500 + build $342,517). In July 2026, St George valued it at $1,000,000. That's +$292,000 in 18 months, on a bank's own number. Here's what the tax code did — and what it does next if she sells.
Same property, two tax codes: her actual new-build treatment vs the identical house bought as established stock after Budget night.
| Already locked in | If bought established | Her new build (actual) |
|---|---|---|
| Stamp duty paid (QLD investor) | - $24,886 on the full price | - $11,218 on the land only |
| Year-1 depreciation | $0 | ~$13,000 · refunded against her salary |
| Bank-verified equity, 18 months | + $292,000 | + $292,000 |
Forward growth 5% pa from the $1.0M valuation · CPI 2.5% · gain taxed at the 47% top marginal rate. She picks whichever CGT method taxes less; the established buyer can't.
| Sell at… | Year 5 (2030) | Year 10 (2035) |
|---|---|---|
| Property value | ~$1,186,000 | ~$1,514,000 |
| Gain on the $708k contract | ~$478,000 | ~$806,000 |
| Her CGT — new build, chooses the 50% discount | ~$112,000 | ~$189,000 |
| Established twin — locked into indexation + 30% floor | ~$181,000 | ~$286,000 |
| Extra tax for losing the choice | ~$69,000 | ~$96,000 |
Why indexation fails a well-bought property: her value is compounding at roughly three times CPI — because the wholesale entry and the build-margin uplift ran ahead of inflation from day one. Indexation only shelters the inflation part of a gain. The 50% discount shelters half of everything. So the better the deal, the bigger the penalty for the buyer who lost the choice — the further ahead your property runs, the more the discount is worth. Buy well and buy new, and the tax code compounds with you instead of against you.
Real purchase and valuation figures (contract Jan 2025; St George bank valuation Jul 2026); client anonymised. Sale scenarios are illustrative projections — 5% pa growth from the July 2026 valuation, 2.5% CPI, 47% top marginal rate on the gain, cost base = contract price for simplicity (buying costs would reduce both sides equally); past performance is not a reliable indicator of future performance. "Established twin" = the identical property bought as established stock after 12 May 2026 at the same price on the same growth path. Note: having bought before Budget night, this client is grandfathered under transitional rules regardless — and as a new-build buyer she keeps the choice of CGT method either way. A new-build buyer signing today keeps that same choice. Depreciation indicative (Div 43 on the $342,517 build + Div 40 plant, QS schedule). Not tax advice — your accountant models your circumstances.
Each card below quantifies one driver of the gap between the two $750,000 deals — and links to the deeper page on the underlying mechanic.
The classic Australian property orthodoxy. Pre-2026 it was correct. Post-2026 the budget split which path gets the tax shelters. Same logic, materially different outcome.
Land appreciates, buildings depreciate — so buy land. 83% of Australian property investors bought established for 30 years on this logic. Your uncle made $400k on a Bendigo weatherboard. Your parents' Western Sydney home tripled.
Pre-2026, the math worked: established negative-geared for the cashflow buffer, 50% CGT discount on the gain at exit. The orthodoxy was earned.
The 2026 federal budget kept full negative gearing — and the choice of CGT method — on new builds only. Buy established now and your losses are quarantined away from your salary, and your exit is locked into indexation with a 30% minimum tax. (Already own established from before Budget night? You're grandfathered — this page is about your next purchase.)
Same $750k, same suburb, same rent — but the post-tax cashflow on established now runs $230/week worse. At sale, the established seller pays ~$12k more CGT on the same gain and never gets the choice of method. Over 10 years the identical purchase diverges by ~$77k–$167k.
The orthodoxy didn't die. It just got rewritten. New build is the new "land + tax shelters" play. Same logic, the only path it still works on.
Both bought at $750,000. Both rented at $670/wk. Both growing at the same 5% pa — so growth cancels out, and everything left in the gap is pure tax code and holding cost. $125k investor income, 32% marginal rate.
All figures in 2026 dollars. Negative numbers are out-of-pocket cost.
| Lever | Established | New build |
|---|---|---|
| Purchase price | $750,000 | $750,000 |
| Stamp duty at settlement (QLD investor) | - $26,775 | - $11,725 |
| After-tax holding cost (10yr, incl. routine maintenance) | - $191,380 | - $71,740 |
| Big-ticket capex events (roof, HWS, HVAC — established only) | - $20,000 | $0 |
| Capital growth (5% pa, 10yr — same for both) | + $471,700 | + $471,700 |
| CGT method at sale | Indexation · 30% minimum (no choice) | Your choice — discount or indexation |
| CGT on sale (illustrative, top marginal) | - $123,000 | - $110,800 |
| 10-year wealth outcome (after tax) | $110,545 | $277,435 |
Illustrative, deliberately conservative. Both properties: $750,000 purchase, $670/wk rent (2% vacancy), 90% LVR ($675,000) at 6.20% interest-only held flat, 8% property management, $4,500 rates + water, $1,700 insurance, maintenance $500/yr new (warranty) vs $2,500/yr established, Year-1 dollars held flat for 10 years (ignores rent growth, which improves both). Depreciation: new ~$14,000 Yr 1 (Div 43 on $370k build + Div 40 plant, indicative QS range) vs $0 established (pre-1987 build; second-hand plant not claimable since 2017). Income $125k PAYG, 32% marginal incl. Medicare. Stamp duty from the Realtyex duty engine, QLD investor rates. CGT on a year-10 sale at 5% pa growth, 2.5% CPI, 47% top marginal on the gain: established = indexed cost base, 30% minimum tax, no choice; new = chooses the 50% discount here (and would simply choose indexation instead if inflation ran higher). Quarantine sensitivity: the established buyer's ~$191k of carried-forward losses aren't destroyed — subject to the final legislation they may offset future property income or the eventual gain; in the best case for established, the 10-year gap narrows from ~$167k to ~$77k — still five figures behind on the identical house. Sale costs not modelled — equivalent on both sides. Run your own numbers in the strategy session model →
Book a 30-minute strategy call. We'll plug your real income, savings and tax bracket into the same model above — and show you what a wholesale new build looks like in your numbers.