The 2026 Budget Changed Negative Gearing. Here's What It Means for Your Rent.

Your landlord may already be drafting the email. "Due to the recent budget changes..." Before you accept that line, there is one fact most landlords are hoping you will not look up: for the majority of Australian landlords, the budget changes nothing at all. Here is what the changes actually say, and what they mean for the notice on your doorstep.

What actually changed

Two changes were announced, both applying only to investment properties purchased after May 13, 2026.

Negative gearing

Negative gearing lets investors deduct property losses against other income, reducing their tax bill. Under the new rules, investors who buy an existing residential property after budget night can no longer deduct those losses against wages or other general income. They can still deduct losses against residential property income and carry losses forward to future years. New build properties are fully exempt: negative gearing against general income remains available for new builds regardless of when they are purchased.

Capital gains tax discount

The capital gains tax (CGT) discount for investment properties is reduced from 50% to 25% for properties purchased after May 13, 2026. Properties bought before that date retain the 50% discount when eventually sold.

Who is exempt (the part that matters most)

Here is the number that gets buried in the coverage: the vast majority of Australian landlords bought their properties long before May 13, 2026. Every single one of those properties is fully exempt from both changes. The new rules do not apply retroactively.

Source: 2026 Australian Federal Budget. Verify details with a tax professional for your specific situation.

That table is the most important thing to understand about the budget and your rent. If your landlord bought before May 13, 2026, the first row is their row. Nothing changed for them. The budget is not a reason for their rent increase.

The government's own number: $2 a week

The government ran the numbers. Their own modelling projects a $2/week increase in rents nationally as a result of these changes. Hold that figure in mind.

$2/week is the total national impact the government expects across all Australian rentals, over time. It is not a floor. It is not what every landlord gets to add. It is a projected national average, and even that modest figure only applies to the slice of the market actually affected: investors buying existing properties after May 13.

If your landlord owned the property before budget night, the $2/week projection does not apply to them. They are exempt from the changes it is based on.

Could your landlord sell? The CGT angle

The CGT discount reduction creates one incentive worth knowing about. Landlords who bought before budget night keep their 50% CGT discount when they eventually sell. That does not change. But some investors may decide the new environment changes their long-term calculus, particularly around future property purchases.

A small number of landlords may sell existing investment properties in the near term to lock in the better discount before any further changes. Housing economists have noted this as a potential supply risk over time. It is not, however, a reason for a rent increase now. A landlord considering selling in two years is not passing on a cost from last night's budget.

If your landlord does decide to sell, that is a separate question with its own process around notice and access. It is a different conversation from whether your current rent increase is justified.

What this means for the notice on your doorstep

If your landlord has cited the budget as justification for a rent increase, ask two questions.

First: when did they buy?

If it was before May 13, 2026, the budget changes do not apply to their property. That rules out the budget as a justification for this specific increase. Full stop.

Second: does the negotiation change regardless?

No. Even for landlords who buy existing properties after budget night and face the new rules, the core negotiation does not change. The question is still what it costs to replace you.

• Two weeks of vacancy on a $600/week property: $1,200
• Reletting fee (1 to 2 weeks rent): $600 to $1,200
• Advertising on Domain and REA: $200 to $400
• Repairs and cleaning between tenancies: $300 to $800

Total: $2,300 to $3,600 conservatively, more for higher-rent properties or longer vacancies. That number has not changed because of the budget. The break-even rent, the point at which your landlord nets the same whether they replace you or keep you at a lower rent, is still lower than what they are likely asking for.

What to do next

If you have received a rent increase notice:

1. Run the replacement cost calculation. Use the calculator to find the break-even rent for your scenario. This is your counter-offer anchor, regardless of what the budget says.
2. Do not engage with the policy debate. Whether negative gearing rules changed, and what the government projected, is a distraction from the number that actually matters: what it costs to replace you.
3. Counter-offer in writing with a specific number. See the counter-offer email templates for ready-to-send language that frames the ask around the landlord's financial interests.
4. If the increase looks excessive against market rents, consider a tribunal application. In NSW, run the NSW Rent Check tool to see how the proposed rent compares to your postcode median. That is stronger evidence than a policy debate.

For the full negotiation process, see the guide to negotiating a rent increase in Australia. To check whether your increase is reasonable before you respond, see is my rent increase reasonable?

The bottom line

The budget changes are real. But the headline landlords are leaning on misses the detail that matters: existing landlords are exempt. If your landlord bought before May 13, nothing has changed for their investment. Their costs did not go up because of this budget.

The government's own number is $2/week nationally. That is the entire expected impact of the policy on Australian rents. It is not a per-property entitlement. It is not what your landlord gets to add because they saw the news.

The negotiation is the same as it has always been. What does it cost to replace you? That number has not changed. Run it, then respond with a specific counter-offer your landlord cannot easily dismiss.