Updated October 2026, 2026 tax changes: from 1 July 2027, negative gearing for residential property is generally limited to eligible new builds (later buyers of that dwelling can't access it), and the 50% capital gains tax discount for individuals, trusts and partnerships is replaced with cost base indexation and a 30% minimum tax on gains. Properties held at 7:30pm (AEST) on 12 May 2026 keep their existing negative gearing treatment, and the changes to capital gains tax apply only to gains that accrue after 1 July 2027; investors in new builds can choose the 50% discount or the new rules. Both changes are now law; see the ATO. This is general information only; speak to a registered tax agent about your situation.
In the global investment landscape, where some countries favour tech or oil, Australia stands out for its substantial property investment. The allure of Australian property for individuals, businesses, and corporations is anchored in two key factors: capital gains and rental income. A property investment company like Liviti can help you build long-term wealth through structured property strategies. Keep reading to learn how you can build wealth with property in Australia.
Capital Gains: The Cornerstone of Property Investment
Let’s delve into the first pillar of property investment: capital gains.
The Unique Value of Investment Properties
Property, whether a house or an apartment, is a common long-term investment. Unlike many investments, investment properties provide a tangible asset that can appreciate over time. This unique characteristic positions them as not just a place of residence but also a source of passive income, making them a multifaceted and enduring tool to build wealth with property.
Learn more about how to create a successful investment property portfolio.
Capital Gains Defined
At the heart of property wealth accumulation lies the concept of capital gains, the increase in property value over time. Houses can see capital gains due to factors like land scarcity and growing demand, as land values tend to rise when cities expand and populations grow. Values can also fall, so growth is never certain.
Property vs. Other Investments
Property behaves differently from shares and bonds: prices move in longer cycles, and the asset can produce rental income. Property can diversify a portfolio, though it also concentrates money in a single asset that takes time to sell. For shares and bonds, speak to a licensed financial adviser.
Strategies Investors Use to Build Wealth with Property
Investors growing a portfolio often use strategies such as extracting equity and refinancing. Both increase borrowing and risk, so they need to suit your circumstances.
Here’s a simple guide on how to purchase a property in Australia.
Tax Considerations: Negative Gearing and Building Wealth with Property
Understanding Negative Gearing:
Negative gearing refers to holding a property at a net loss. A property is negatively geared when its rental income is less than its expenses. The loss can reduce tax on other income, but from 1 July 2027 this is limited to properties held at 7:30pm (AEST) on 12 May 2026 and eligible new builds.
Key Components of Negative Gearing:
Negative gearing depends on property-related expenses such as mortgage interest, property management fees, maintenance costs and depreciation, so accurate records of these expenses are important.
Given the complexity and potential financial implications of negative gearing, speak to a registered tax agent about how it applies to your circumstances.
Unlocking Passive Income with Positive Gearing to Build Wealth with Property
Understanding Positive Gearing:
Positive gearing signifies a scenario where rental income exceeds property expenses. Essentially, the property pays for itself and leaves additional funds in your pocket.
Income Generation and Cash Flow
Positive gearing emphasises income generation and positive cash flow. Some investors look at positive gearing, especially if they already own negatively geared properties, because positively geared properties can provide a financial buffer when interest rates change.
Bringing It Together
Negative & positive gearing are two ways a property can sit within a broader investment plan aimed at long-term wealth accumulation through property appreciation and capital growth.
Borrowing to invest amplifies both gains and losses, so the level of borrowing needs to suit your circumstances.
Learn more about what to look out for when choosing a suburb to invest in.
Liviti’s Guidance
Liviti’s team of property strategists works with investors on property selection, weighing capital growth prospects and cash flow, including the mix of negative & positive gearing. Working with property investment advisors Sydney at Liviti brings strategy, finance, buyer’s agency and construction under one roof.
