Blog post by Empower Wealth

Should I Still Invest in Property Without Negative Gearing?

Last week, we released a blog titled: What the 2026 Negative Gearing and CGT Changes Could Mean for Property Investors.

Since then, one question has come up again and again from our clients and close network:

“Should I still invest in property without negative gearing?”

And honestly, it’s understandable why.

Between headlines about negative gearing, capital gains tax and housing affordability, many investors are wondering whether property investing will still stack up in the years ahead.

Negative gearing has been part of Australia’s property investment landscape for decades, so it’s fair to say the proposed changes announced in the 2026 Federal Budget represent one of the most significant shifts to property investment tax settings in a generation. It’s also important to note that, at the time of writing, these proposed changes have not yet passed legislation.

But here’s the important distinction:

Under the proposed changes, the tax benefit may not disappear entirely. For affected properties, the benefit may shift from an upfront negative gearing deduction to a deferred tax benefit that can be used later against future residential property income or capital gains.

In other words, it isn’t about “losing negative gearing”.

It may be about when investors receive the tax benefit and what that means for their cash flow in the meantime. Because while tax settings matter, they’ve never been the entire strategy.

Negative Gearing Was Never the Strategy

Negative gearing is simply a tax outcome that occurs when an investment property costs more to hold than the rental income it generates.

The debate around negative gearing versus positive gearing has been around for years. At Empower Wealth, we’ve never recommended investing in property for tax reasons alone — especially when negative gearing is only ever a moment in time.

Tax benefits may help with cash flow, but long-term wealth is usually built through quality assets, strong fundamentals, capital growth, scarcity and disciplined cash flow management.

In other words, tax benefits can support the journey but they should never be the reason for the investment itself.

So… What Actually Changes?

Under the proposed changes discussed in the 2026 Federal Budget, some investment property losses may no longer be immediately deductible against personal income.

Instead, those losses may be carried forward and applied against future residential property income or future capital gains. In simple terms:

the timing of the tax benefit may change.

And that timing matters. In Ben’s demo video above, he walks through a simple modelling example showing the difference between receiving an upfront negative gearing benefit versus a deferred tax benefit over time.

If you’d like to test the numbers yourself, you can download the Negative Gearing Calculator here.

However, even if the long-term numbers appear similar in some scenarios, investors may need to contribute more out-of-pocket cash flow in the earlier years of ownership. That’s why the conversation should not just be about tax deductions.

It should also be about:

borrowing capacity
holding power
cash buffers
long-term affordability
and whether the asset itself is investment-grade.

Why Strategy Matters More Than Ever

One of the biggest risks during uncertain periods is making reactive decisions without a clear long-term plan. And this is where many investors can run into trouble.

Because if an investment only works because of a tax deduction, it may not have been a strong investment to begin with.

At Empower Wealth, we’ve always believed successful investing starts with strategy first. Our team works with clients to build a personalised Property Portfolio Plan, helping investors understand:

their borrowing capacity
cash flow position
lifestyle goals
risk profile
and long-term investment roadmap.

To date, our team has produced more than 5,000 Property Portfolio Plans, helping everyday Australians make more informed property decisions based on strategy, not speculation. Last year, we’ve also introduced the Property Portfolio Plan Tracker, giving Empower Wealth clients a clearer way to monitor their progress against their plan over time.

Ultimately, the right strategy should still make sense beyond changing market conditions or tax settings.

If you’re an Empower Wealth client, you should have already heard from us about the recent proposed changes. But if the email has gone to your spam folder, or you’d like to review your plan in light of the latest discussion, please reach out directly to your adviser or contact us at [email protected].

Cash Flow Is Still King

If there’s one thing these discussions highlight, it’s this:

Cash flow matters more than ever.

The ability to comfortably hold quality assets over the long term has always been one of the biggest drivers of successful property investing. That’s why understanding:

your surplus cash flow
future holding costs
interest rate sensitivity
and portfolio sustainability

can become even more important under a deferred tax benefit structure.

This is also where having integrated support across finance, cash flow management and investment strategy can make a significant difference. If you’re looking for an app to manage your money better, we strongly recommend our in-house built platform called Moorr. With more than 60,000 users, Moorr is becoming Australia’s fastest growing money & property app.

And if your mortgage repayments are already feeling tight, you may also find our recent video series helpful: How to Reduce Mortgage Repayments: 6 Practical Ways to Save. It covers practical ways homeowners and investors can review their loans, improve cash flow and reduce repayment pressure where possible.

Final Thoughts

There’s no doubt these proposed changes could reshape investor behaviour over the coming years. But investment-grade property has never been built purely on tax deductions.

Long-term success has historically come from buying quality assets, managing cash flow carefully and making strategic decisions aligned with your personal goals and circumstances.

It’s also worth being cautious around alternative ownership structures, such as trusts. We raised this in our blog last year, The Truth About Trust Structures for Property Investment: Why Most Aussies Should Proceed With Caution, and with the Federal Budget also turning attention to this area, it’s more important than ever to get qualified advice before making any structural changes.

Because at the end of the day…

Negative gearing was never the strategy.
It was simply a tax outcome.

If you’d like qualified, personalised professional support, our team would love to help. From Property Portfolio Planning and Mortgage Broking to Property Tax Specialists, Empower Wealth offers a free initial consultation to help you understand your options and make more informed decisions. Simply fill in the form below or click here to learn more.

Categories: Investment Education, Property Investment Advice

Tags: capital gains tax, Capital Gains Tax (CGT), Federal Budget, investing for retirement, Negative Gearing, Positive Gearing