The Australian Federal Budget announced on 12 May 2026 has proposed major changes to the way residential investment property may be taxed in Australia.
If you live in Thailand and own Australian rental property, these changes may affect your Australian tax position. They may also affect future decisions about buying, selling, refinancing or remitting rental income to Thailand.
The changes will not affect every property owner in the same way. The outcome may depend on when the property was acquired, whether it is an established property or a new build, whether it is profitable or loss-making and whether funds are moved between Australia and Thailand.
This article explains the proposed changes to negative gearing and highlights the key questions Australian property owners in Thailand should consider.
This article is general information only and is not intended to replace Australian or Thai tax advice. It does not take into account your personal circumstances, objectives, financial situation or needs. Some Budget measures are still proposals and will not have legal force until enacted by Parliament. Details may change during the legislative process.
Not sure which Budget changes may affect you? Download our Australian Budget 2026–27 checklist below and use it to review your property, investments, trusts, income, remittances and records before you act.
What Changed for Australian Property Owners?
The main property change in the 2026–27 Australian Federal Budget is the proposed restriction of negative gearing for residential investment property from 1 July 2027.
Under the proposed rules, Australian residential investment properties may be treated differently depending on when they were acquired and whether they are new builds.
Broadly, the proposed rules create three important categories:
- Existing residential investment properties held before Budget night may be protected under grandfathering rules.
- Established residential properties bought after Budget night may lose access to the current negative gearing treatment from 1 July 2027.
- New builds are expected to receive more favourable treatment, as the policy is designed to encourage new housing supply.
For Australians in Thailand, the Australian tax treatment is only part of the picture. You may also need to consider whether rental income is remitted to Thailand, whether future sale proceeds are brought into Thailand and whether your records clearly show the source of funds.
The exact details, including the final grandfathering rules and the definition of a new build, will need to be confirmed once legislation and further ATO guidance are available.
What Is Negative Gearing?
Negative gearing is a common part of Australian property investment.
In simple terms, a property is negatively geared when the deductible costs of holding the property are higher than the rent it earns.
Those costs may include loan interest, property management fees, repairs, insurance, council rates and other allowable expenses.
Under the current rules, many Australian property investors can offset the rental loss against other income, such as salary or business income. This can reduce their Australian taxable income.
The Budget proposes restricting this treatment for some residential investment properties from 1 July 2027.
That means a property which previously produced a useful Australian tax deduction may have a different after-tax result under the new rules.
How Different Australian Properties May Be Treated
The proposed rules are likely to treat Australian residential investment properties differently depending on when they were acquired and whether they are new builds.
Existing Properties Held Before Budget Night
Residential investment properties held before Budget night may be protected under the proposed grandfathering rules.
For grandfathering, the key point is expected to be whether the contract was signed or entered into by 7.30pm AEST on 12 May 2026, even if settlement occurred later.
If your Australian rental property falls within the grandfathering rules, it may continue to receive the current negative gearing treatment. This could be important if the property is loss-making and those losses have been useful in your Australian tax position.
For Australians in Thailand, the property’s acquisition history is important. You should keep the purchase contract, settlement statement and any documents showing when the contract was signed.
Established Properties Bought After Budget Night
Established residential properties bought after Budget night may lose access to the current negative gearing treatment from 1 July 2027.
Under the proposed rules, rental losses may no longer be available to offset salary, business income or other non-property income. Instead, those losses may be quarantined and carried forward to offset future residential rental income or capital gains from residential property.
This could affect the after-tax return of an Australian rental property bought after Budget night, especially where the investment relies on tax deductions to support cash flow.
If you bought an Australian property after Budget night, or are considering doing so, you should check the position before assuming the old negative gearing rules will continue to apply.
Properties Bought From 1 July 2027
Residential properties bought from 1 July 2027 are expected to fall under the new restricted rules unless they qualify as new builds.
Future purchases may therefore need closer review. An established property and a new build may produce very different tax outcomes, even if the purchase price and rental income look similar.
For Australians living in Thailand, the after-tax position should be checked before committing to a purchase. If the investment depends on tax deductions to support cash flow, the after-tax position should be reviewed before you sign a contract.
New Builds
New builds are expected to receive more favourable treatment under the proposed rules.
The policy aims to encourage new housing supply, so new residential properties may continue to receive full negative gearing treatment where established properties do not.
The Budget also indicates that investors in new builds may be able to choose between the current 50% CGT discount and the new CGT arrangements.
This does not mean new builds will always be the better investment. Tax is only one part of the decision. Location, price, rental demand, build quality, financing and long-term capital growth still matter.
However, from a tax perspective, the distinction between an established property and a new build may become more important from 1 July 2027.
What May Count as a New Build?
The final definition will need to be confirmed in the legislation and any ATO guidance.
However, the Budget material suggests that a new build is likely to mean a residential property that genuinely adds to the housing supply.
This may include newly constructed dwellings, off-the-plan apartments, residential construction on vacant land or a new dwelling created where an older property has been replaced by more than one dwelling.
An established property that has simply been renovated, extended or improved may not qualify.
The key question is likely to be whether the property adds new housing supply, not simply whether money has been spent improving it.
What Happens if Your Australian Property Makes a Loss?
If your Australian rental property makes a loss, the proposed rules may affect how that loss is used.
Under the current rules, many investors can offset rental losses against other income. Under the proposed rules, this may change for affected properties.
For affected established residential properties, rental losses may no longer be available to offset salary, business income or other non-property income.
Instead, those losses may be quarantined and carried forward to offset future residential property income or relevant property gains.
This matters for three reasons:
- The immediate tax benefit of holding a loss-making property may be reduced.
- The property’s after-tax cash flow may change.
- Losses may become more relevant to future property income or sale planning, rather than being useful against other income each year.
For Australians in Thailand, this can still matter even if you do not currently earn Australian salary income. You may return to Australia in the future, sell the property later or hold multiple properties with different income and loss positions.
The key point is to understand the property’s after-tax cash flow, not only the headline rent and expenses.
What This Means if You Already Own Australian Rental Property
If you already own Australian rental property while living in Thailand, the first question is whether the property may be protected under the proposed grandfathering rules.
You should check:
- When the property was bought
- When the contract was signed
- Whether the property was held before 7.30pm AEST on 12 May 2026
- Whether the property is established or newly built
- Whether it is profitable or loss-making
- Whether rental losses have been used in your Australian tax position
- Whether rental income is kept in Australia or remitted to Thailand
- Whether future sale proceeds may be brought into Thailand
For some existing owners, grandfathering may be valuable. If the property is negatively geared and protected under the proposed rules, selling it may mean giving up treatment that may not be available on a later established property purchase.
That does not mean you should automatically hold the property. It means you should understand the tax consequences before making a decision.
If you are considering selling, refinancing, changing ownership or restructuring how the property is held, Australian tax advice may be needed.
What if You Plan to Buy Australian Property?
If you live in Thailand and plan to buy Australian property, the Budget changes may make the decision more complex.
Before the Budget, many investors compared properties mainly on price, rent, location, financing and expected growth.
Those factors still matter. However, the proposed tax changes mean the type of property and acquisition date may also affect the after-tax outcome.
Before buying, you may need to consider:
- Is the property established or newly built?
- Will it qualify as a new build under the final rules?
- Will the property be profitable or loss-making?
- If it makes a loss, can that loss be used?
- Will losses be quarantined and carried forward?
- Will rental income be kept in Australia or remitted to Thailand?
- Could future sale proceeds be brought into Thailand?
- Do you need Australian property tax advice before signing a contract?
For Australians in Thailand, buying Australian property should not be viewed only through the Australian tax system. If income or gains may later be moved into Thailand, the Thai tax and documentation position should also be reviewed.
What if Rental Income Is Remitted to Thailand?
Australian rental income may be taxable in Australia.
If you are also Thai tax resident and bring that income into Thailand, the Thai tax position may need to be reviewed.
Thai tax residency is generally based on time spent in Thailand during the calendar year. If you spend 180 days or more in Thailand during a calendar year, you may be treated as Thai tax resident for that year.
For Thai tax residents, foreign income and gains may need to be reviewed if they are remitted to Thailand.
Thai tax treatment of foreign-sourced income can be complex and has been subject to changing administrative practice. Specific Thai tax advice should be obtained before making large remittances into Thailand.
Thai remittance rules continue to evolve, so the position should be checked based on the rules and guidance in force at the time funds are remitted.
For rental income, the practical questions may include:
- Was the income earned while you were Thai tax resident?
- Was it kept in Australia or transferred to Thailand?
- Was Australian tax paid on the income?
- Can you show the amount of income, expenses and net profit?
- Can you separate rental income from capital, savings or loan funds?
- Do your bank records show the movement of funds clearly?
Clear records are essential. If funds are moved from Australia to Thailand, you should be able to show what the funds represent and when they arose.
What if You Sell Australian Property and Bring the Money to Thailand?
Selling Australian property may create an Australian capital gains tax issue.
The main residence exemption may apply in some cases, but it should not be assumed. It can be affected by residency, rental history, how long you have lived overseas and whether the property is sold while you are a foreign resident for Australian tax purposes.
This article focuses on rental property and negative gearing. If you own a home in Australia, or a property that is or was your main residence, you should also review the main residence exemption before selling.
For Australians in Thailand, sale proceeds may also raise Thai tax and documentation questions if they are brought into Thailand.
Sale proceeds may include several different elements, such as:
- Original capital invested
- Capital gain
- Loan repayment proceeds
- Rental income held in the same account
- Savings or other funds mixed in the account
If money is remitted to Thailand, you may need to show what the funds represent. This is especially important if sale proceeds are mixed with rental income or other income in the same bank account.
Good records can make the difference between a clear explanation and a difficult tax question.
Records Australian Property Owners Should Keep
Australian property owners in Thailand should keep clear records for both Australian tax and Thai remittance purposes.
Useful records may include:
- Property purchase contract
- Settlement statement
- Contract signing date evidence
- Loan documents
- Mortgage interest statements
- Rental income records
- Property management statements
- Repairs and maintenance invoices
- Capital improvement records
- Insurance records
- Council rate notices
- Australian tax returns
- Australian notices of assessment
- Bank statements showing rental income and expenses
- Bank statements showing transfers from Australia to Thailand
- Property valuations, especially around 1 July 2027 where relevant
- Sale contract and settlement statement if the property is sold
These records can help establish when the property was acquired, whether it may be grandfathered, how much income or loss it produced and what funds were later remitted to Thailand.
Poor records can turn a manageable tax issue into a much harder problem.
Questions to Ask Before You Buy, Sell or Hold Australian Property
Before making a decision about Australian property while living in Thailand, ask:
- Was the property contract entered into before 7.30pm AEST on 12 May 2026?
- Is the property likely to be grandfathered?
- Is it an established property or a new build?
- Does the property make a profit or loss?
- Can rental losses still be used against other income?
- Will losses be quarantined and carried forward?
- Is rental income being remitted to Thailand?
- Could future sale proceeds be brought into Thailand?
- Do you have records showing the source of funds?
- Could the main residence exemption apply?
- Are you planning to return to Australia?
- Do you need Australian tax advice, Thai tax advice or both?
These questions should be answered before you make major decisions, not after a contract has already been signed.
What Should Australian Property Owners Do Next?
Do not assume the Budget affects every Australian rental property in the same way.
- If you already own property, check whether it may be grandfathered and whether the proposed rules could affect future sale, refinancing or ownership decisions.
- If you plan to buy property, review whether the property is established or newly built and whether the investment still works after tax.
- If rental income or sale proceeds may be moved into Thailand, review the Thai tax and remittance position before transferring large amounts.
In many cases, you may need specialist Australian tax advice. You may also need Thai tax advice on residency, remittances and documentation.
Speak With Our Team Before You Make a Decision
If you are an Australian living in Thailand and own, or plan to buy, Australian property, it is worth checking how the Budget changes may affect your position.
Our team can help you understand the Thai tax and remittance issues, identify the key Australian tax questions and explain whether specialist Australian tax advice may be needed before you act.
Further Reading in This Series
The Australian Budget 2026–27 may affect Australians in Thailand in different ways depending on their property, investments, trust structures, tax residency and remittance plans. You may also find these related articles useful:
Australian Budget 2026–27: What Aussies in Thailand Need to Know
Start with the full overview of the key Budget changes affecting Australians in Thailand, including property, investments, trusts and remittances.
Australian Budget 2026–27: What Expats in Thailand with Shares, ETFs and Crypto Need to Know
A guide to the proposed CGT changes and why investment records, valuations and remittance planning may matter.
Australian Budget 2026–27: Australian Family Trusts and Expats in Thailand
A guide to the proposed 30% minimum tax on discretionary trusts and what Australian expats with family trust structures may need to review.
