Australia
Same house, same loan. Contract signed after Budget night, taxed differently from 1 July 2027.
The same property, bought on either side of 7:30pm AEST on 12 May 2026, is now taxed differently from 1 July 2027. This calculator runs one property three ways — bought before the cut-off, bought after it, and bought as a new residential dwelling — so you can see the difference in yearly tax, where the quarantined losses go, what happens on sale and the after-tax return on your money.
Same property, same finance, 10 years. The loss is not lost for good: it is carried forward against future rent and capital gains.
Why can buying after the cut-off end with more total profit but a lower IRR? The quarantined losses are not lost: they come back when you sell, reducing a gain taxed at your top rate. The pre-cut-off owner used the same losses each year at a lower rate. More money in total, but later — and IRR counts timing.
With the default inputs the property runs at a tax loss. In 2026–27 all three owners get the same benefit: a tax effect of -$5,523. In 2027–28 the pre-cut-off owner and the new-build owner still offset the loss against salary (-$5,283 and -$5,283), but the post-cut-off owner cannot: their tax effect is $0 and the loss is carried forward.
By year 10 the post-cut-off owner has $118,747 of quarantined losses. On sale those losses reduce the capital gain before the discount is applied, so part of the value comes back — but later, and against a gain that may otherwise have been discounted. Over 10 years the after-tax IRR is 8.9% for the pre-cut-off purchase, 8.8% after the cut-off and 9.3% for a new build.
Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 inserts sections 26-155 and 26-160 into the Income Tax Assessment Act 1997 and applies them from the 2027–28 income year. Its own worked example (a landlord with $65,000 of deductions against $50,000 of rent carrying forward $15,000, then $33,000, then using it all) is one of the tests our engine must pass. The ATO summarises the change on its reform page.
From the 2027–28 income year, which begins on 1 July 2027 (Schedule 2, item 5).
Yes. For the cut-off, s.26-155(3) treats you as owning the dwelling from when you entered into the contract.
Yes. They reduce later residential rental income and capital gains from residential property. They are lost only if you never have such income or gains.
Which properties count as a "new residential dwelling" is left by the Act to a ministerial determination (s.26-160(4)) that had not been made when we last checked. Results for new builds assume the property will qualify.
Tax rules: AU registry v1.0.0, last reviewed 2026-09-30. Figures in the text use the default inputs above. Sources and method.