The short answer: two measures from the 2026-27 Budget point the same way for future property investors. Negative gearing on residential property is limited to new builds from 1 July 2027, and a new $2 billion Local Infrastructure Fund is aimed at unlocking new housing supply. For Aussie expats weighing an investment property, that's a change to understand rather than a reason to buy on its own. Lender policy, settlement timing and your own tax position still matter as much as the policy signal.
The two measures
Negative gearing is limited to new builds
From 1 July 2027, losses on established residential investment properties bought from 7:30pm AEST on 12 May 2026 can only be deducted against income from residential property. New builds keep full negative gearing, before and after that date. The change is now law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Federal Register of Legislation).
"New build" has a specific meaning. The Budget factsheet describes it as a residential property that genuinely adds to supply: an apartment bought off the plan, anything built on vacant land, or a knock-down that replaces one house with more dwellings. A knock-down rebuild that replaces one house with one house doesn't count, and a later buyer of a new build doesn't get the new-build treatment (Budget 2026-27, Negative Gearing and Capital Gains Tax Reform). Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the final test is set by the Minister in a legislative instrument, so check a specific property against that test before relying on it. Our guide to what the 2026 Budget means for Aussie expats covers the capital gains tax side.
A $2 billion Local Infrastructure Fund
The Government is putting a further $2 billion into housing-enabling infrastructure, and says the Local Infrastructure Fund will support up to 65,000 homes over 10 years (Prime Minister of Australia, 12 May 2026). The fund pays for the local works that new housing needs, such as local roads, water and wastewater infrastructure, and electricity connections. Local governments and state utilities can apply, with the first funding round expected to open later in 2026 (Treasury, Local Infrastructure Fund).
Read together, the direction favours new supply. That's a policy signal, not a recommendation. Whether a new build suits you depends on the property, the price and your plans.
Lender treatment of new builds varies
Lender policy on new builds varies. On an off-the-plan purchase, the loan is generally based on the lower of the purchase price and the lender's valuation, so a valuation that comes in under the contract price means a bigger deposit. Construction loans release funds in stages as the build progresses, and the lender usually signs off each stage first. The lender that suits established stock isn't always the one that suits a new build.
For an expat earning in SGD, HKD or AED, foreign income shading, lender policy on off-the-plan and settlement timing all stack up and narrow the realistic lender panel further. Starting the lender conversation well before you sign a contract is the simplest way to avoid surprises at settlement. See how Australian lenders assess overseas salary.
Timing: settlement can be a long way off
Off-the-plan and house-and-land purchases often settle well after the contract is signed. Your income, savings and overseas status at settlement may not match the picture on the day you sign. In our experience, if an approval has expired or your circumstances have changed by then, the lender will look at your application again before it funds the loan.
A job change, a partner relocating or a change to how your bonus is paid can all move the numbers in between. Plan for that from day one, with a buffer in case your income looks different by settlement.
FIRB: citizens, permanent residents and everyone else
Buying residential property as an Australian citizen generally doesn't need FIRB approval, wherever you live. FIRB notes that a citizen living overseas can technically be a foreign person, but the foreign investment regulations exempt Australian citizens who aren't ordinarily resident here from needing approval (FIRB, Key concepts). Our guide to FIRB approval for Australian expats covers the exceptions, such as buying with a partner who isn't Australian.
Since 1 April 2025, it has been the Government's policy that foreign persons, including temporary residents, are generally banned from buying an established dwelling. The ban was originally set for two years. The Government announced in the 2026-27 Budget that it will be extended to 30 June 2029, and FIRB's current guidance applies it to that date (ATO, Extending the ban on foreign purchases of established dwellings; FIRB, Guidance Note 6, Residential land). New dwellings bought by a foreign person generally need FIRB approval.
Permanent residents are exempt from the ban, including those living overseas
This is the part that's often stated wrongly. Holders of an Australian permanent visa don't need to apply for or receive foreign investment approval to buy residential property, and that includes an established dwelling (FIRB, Guidance Note 6, Example 13). So the established-dwelling ban doesn't apply to them.
Precisely: a permanent resident who is ordinarily resident in Australia isn't a foreign person at all. A permanent resident living overseas who hasn't been in Australia for 200 or more days of the previous 12 months can technically count as a foreign person under the foreign investment law, but the regulations exempt residential land bought by a permanent visa holder, so no FIRB approval is needed and the ban doesn't bite (FIRB, Guidance Note 2, Key concepts). What can still apply is state tax. New South Wales treats a permanent resident who doesn't meet its 200-day test as a foreign person for surcharge purchaser duty and surcharge land tax (Revenue NSW, Surcharge land tax), so check the state rules for the property you're looking at.
If you're buying with a partner who isn't a citizen or permanent resident, the exemption for a foreign-national spouse applies only when the property is bought as joint tenants with an Australian citizen or permanent resident spouse, not as tenants in common (same FIRB source). How you hold title is a legal decision, so take it to a property lawyer before you commit, and confirm your own position with FIRB or a lawyer.
Location still matters
If you're buying for capital growth, the location, the builder and the quality of the building matter as much as the lender. For location-specific work we'll often suggest pairing with a buyer's agent who knows the area. Lender choice is our part of the job, and property selection is theirs.
Worth a conversation?
If an investment property is on your mind, even loosely, a conversation can map your borrowing position, the lender options and whether the new-build path fits your timing. Book a call with our team.
Sources
- Budget 2026-27: Negative Gearing and Capital Gains Tax Reform (factsheet) (accessed 18 September 2026)
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (accessed 18 September 2026)
- Prime Minister of Australia: More homes and a fair go for first home buyers, 12 May 2026 (accessed 18 September 2026)
- Treasury: Local Infrastructure Fund (accessed 18 September 2026)
- Foreign Investment Review Board: Key concepts (accessed 18 September 2026)
- ATO: Foreign investment, extending the ban on foreign purchases of established dwellings (accessed 18 September 2026)
- Foreign Investment Review Board: Guidance Note 6, Residential land, version 5 (1 July 2026) (accessed 18 September 2026)
- Foreign Investment Review Board: Guidance Note 2, Key concepts, version 5 (accessed 18 September 2026)
- Revenue NSW: What is surcharge land tax (accessed 18 September 2026)
Aussie Expat Home Loans holds Australian Credit Licence 509125. This article is general information only and doesn't take your personal circumstances into account. It isn't a recommendation to buy any type of property. Negative gearing is a tax matter for a registered tax agent, and FIRB requirements depend on your citizenship and residency, so confirm them with FIRB or a lawyer. Lender policies vary and change over time. Before acting, consider your own situation and seek advice specific to it.
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