Since 1997 I have worked alongside builders and developers, helping people build homes to hold. For most of that time, building new was one choice among many. Since the law changed in June 2026, it has a place of its own.
Why new builds stand apart now
From 1 July 2027, negative gearing is limited to new builds, apart from homes already held on 12 May 2026. New builds also keep access to the 50 per cent capital gains discount, while the rest of the market moves to indexation and a minimum tax. In broad terms, a new build adds a home that was not there before: off the plan, on empty land, or a duplex where one house stood. The exact definition is set by the Minister, and the detail is still being settled. I have written about the change in Negative gearing after 2026.
Three ways to build new
- House and land: a new home on a new block, often in an estate. The land contract and the build contract are usually separate.
- A duplex: two homes on one block, sometimes where one older house stood. Two rents from one piece of land, with more approvals and a larger build.
- The mini developer: a larger block, or an older home on one, with two or more new homes built on it, to hold some or all of them.
Holding or selling what you build
Building to hold and building to sell are taxed differently. A home built to hold is an investment, and its gain is taxed when it is eventually sold. Homes built to sell can be treated as a business, with the profit taxed as income and GST that may apply. Where the line falls depends on the facts, so it is a conversation to have with an accountant before you start, not after.
What building involves
A new build asks more of you than an established home. Council approvals take time. The loan is paid out in stages as the build goes up, with interest on each stage. Costs can rise, and builders can be delayed. Choosing the builder matters as much as choosing the land. The concierge on our team keeps the broker, lender, solicitor and builder in step, so each stage is ready when it falls due.
Who this does not suit
Building new does not suit someone who needs rent from the first week, or who could not carry the loan through a delay. It does not suit someone who would lose sleep over a council letter. And a duplex or a small development is a project to see through, with decisions along the way, before it becomes an investment you hold.
The questions I would ask
- Will this home meet the new-build definition when it is finished?
- Do you plan to hold it, or to sell some or all of it?
- Can you carry the loan through the build and a delay?
- Who is the builder, and what have they built before?
- How long until it is let, and what will it rent for?
A new home comes with rules that favour it now. It also comes with a build to see through. Knowing both is how you decide whether it belongs in your plans.
Nicholas Lockhart
General information only. No advice is given. This article reflects the law as at 10 October 2026. Tax outcomes depend on your own circumstances; an accountant can confirm how the rules apply to you.
Source: Australian Taxation Office, Tax reform: reforming negative gearing and capital gains tax; Treasury Laws Amendment (Tax Reform No. 1) Act 2026.