Why Buying an Existing Investment Property Now Could Cost You $200,000 in Retirement

Australia's 2026 federal budget has fundamentally changed the investment property landscape. Here's what every investor needs to understand before their next purchase decision.

The 2026 federal budget introduced one of the most consequential shifts in Australian property investment policy in recent memory. Negative gearing and the capital gains tax (CGT) discount now apply in full only to new builds - not to existing properties.

For anyone considering an investment property right now, this is not a minor administrative change. It is a structural change that fundamentally alters the after-tax return on existing properties. And the numbers speak for themselves.

A tale of two investors

To illustrate the real-world impact, consider two hypothetical investors who each spend $1 million on an investment property today - one buys new, one buys existing.

Why the gap is so large

Tracey's new build gave her access to the full suite of tax advantages that have long made property investment attractive in Australia. She could claim depreciation on the building and its fixtures, negatively gear her interest and holding costs against her taxable income, and apply the most favourable CGT method available. Her effective out-of-pocket holding cost each year was essentially zero.

Bill's situation, under the new budget rules, was markedly different. Because his property was existing, he lost the ability to negatively gear his expenses against his income. That cost him approximately $20,000 per year out of his own pocket - every year, for ten years - simply to hold the asset. He also faced higher maintenance costs typical of older properties, and attracted slightly lower rental yields than a comparable new home.

By the time Bill sold, he had paid roughly $200,000 more in net holding costs than Tracey. Their tax bills on sale were similar. But that decade of out-of-pocket costs meant his retirement position was significantly weaker.

"Tracey retires with close to a million dollars because she bought new. Bill retires with significantly less because he didn't."

What this means for investors considering a purchase today

These figures are illustrative and make a number of assumptions - they are not financial advice or precise modelling. Individual outcomes will vary depending on income, interest rates, depreciation schedules, and CGT timing. But even as a rough order-of-magnitude guide, the directional message is clear.

The budget has not made property investment less viable. It has made new property investment more compelling relative to existing properties than at any point in the past decade. Every investor who buys existing today is forgoing the full tax benefits that new builds retain - and the compounding effect of those annual costs over a typical hold period is substantial.

South East Queensland: where the growth corridor meets the tax advantage

For investors positioned to act, Dwyer Property Investments has been building new investment properties across South East Queensland for over 41 years. The region, particularly the Moreton Bay corridor, continues to be one of Australia's strongest growth markets, driven by infrastructure investment, population growth, and relative affordability compared to the southern capitals.

Ready-to-start-construction investment properties are currently available from $825,750, and a limited number of opportunities remain across the Moreton Bay region and broader South East Queensland.

Frequently Asked Questions

Get the numbers for your situation

Dwyer Property Investments offers complimentary cashflow modelling and tax benefit analysis sessions with Property Investment Specialist Gerard Condon. There's no obligation - just a clear picture of what new build investment could look like for you specifically.

The figures and comparisons provided in this article are indicative only and do not constitute financial, taxation, legal, or investment advice. Depreciation, GST, and capital gains tax outcomes will vary based on individual circumstances and legislative changes. Independent advice should be obtained from a qualified accountant, financial adviser, or solicitor before making any investment decision.