New build or established? The post-budget guide for your next investment property

The 2026 budget turned an old question into an urgent one. 

From 1 July 2027, an established investment property bought after 12 May 2026 can no longer set its losses against your salary. The losses are quarantined and can only be used against future rental income or capital gains on sale. A qualifying new build keeps negative gearing , and retains access to the existing CGT discount arrangements when sold. 

Investors have noticed. Investor loan commitments fell 8.6% in the June quarter , yet investor loans for new housing rose 4.2% (ABS; HIA). In our own pipeline, four of 11 active clients switched from established to new as the detail landed. 

Some of them are right. Some are buying a tax outcome instead of an asset. The way to tell the two apart is to run the whole comparison, not the brochure version. 

The comparison most people run, and what it leaves out 

Put a gross yield beside a gross yield and the two look identical: 4.7% for a $780,000 house-and-land package, 4.6% for a $780,000 established house in the same city. 

Five things sit outside that comparison, and each moves the answer more than the yield gap: the tax treatment, depreciation, maintenance, entry costs and timing, and how much of the price is land. 

So we built a dated model. Same $780,000 in Queensland. A $400,000 greenfield lot with a $380,000 turnkey build, against a four-bedroom house built around 2000 on a bigger block. Both settle 1 November 2026, both sold 10 years later, 80% borrowed at 6.75%, an investor at the 37% rate. 

Before the first rent 

Based on Queensland transfer duty rates applying at the time of the modelling, the new build pays duty on the land only, $12,425 against $28,125 on the established house. But it carries a year of interest while it's built, about $31,300, before a tenant pays anything. 

Net result: the new home needs about $15,000 more up front, $202,251 against $187,225. That is the price of new. What it buys comes next. 

The first year of renting 

This is where the gap opens. After tax, the new home costs about $104 a week to hold in its first year of renting. The established home costs about $340 a week. 

Almost none of that is rent. The model assumes a $7,800 maintenance allowance on a 25-year-old house against $1,500 under builder warranty, $15,000 of depreciation against $4,000, and, from July 2027, a refund the established home no longer gets. 

Ten years later 

Here the established home fights back. More of its price is land, and land is what grows. On the same growth assumptions it is worth about $53,000 more at sale, and pays no tax on the gain because its quarantined losses cover it. 

But it has cost far more to get there. Take off the money put in and 10 years of shortfalls, and the new home finishes $143,486 ahead against $102,766: an annualised return of 5.2% against 3.1%. 

In a bad decade, 8% interest, land growing 3%, both lose money, and the established home loses more.

In a strong one, both do well and finish close, because a bigger block does more growing. 

The $780,000 model: New build vs Established

Note: The figures shown are illustrative only and are based on a specific scenario. Source: High Income Property

What actually decides it 

Not the building. The land under it. 

Give the greenfield land two percentage points a year less growth than a middle-ring suburb and the established house wins. Give it two points more and the new build wins by a wide margin. That single assumption is worth more than every other difference in the model put together. 

So the test before buying new is simple: is there evidence this land is being repriced?

Queensland's 2026 statutory valuations lifted Ipswich land values 51% against 17% for Brisbane. Some growth corridors reprice like that. Others don't. 

Where established still wins 

A firm that arranges house-and-land packages should say plainly where the other purchase is better. On the model, it's four situations. 

When the location will outgrow the greenfield site : a larger block in a scarce suburb carries more of the thing that appreciates. 

When you can't carry the build : about $15,000 more up front and a year without rent is a real cost for an investor whose cash or borrowing capacity is tight. 

When your tax position is different : little other income to gear against, or a company or super structure outside the reform's reach. 

When 'new' isn't new in the sense that matters : a spec home rented beyond the draft 24-month window, or a package that isn't full turnkey fixed price, loses part of the case. 

Strategy first, property second 

The mistake is buying on a label. The first property decides a great deal about the second: how much borrowing capacity is left, whether the rent covers enough interest for a lender to say yes again, which state's land tax threshold you've used, and whether your losses are working against salary or sitting quarantined. 

Either can be the right first step. A new home where the land is being repriced holds cash and keeps the concessions. An established home on a big block in a scarce suburb grows faster and rents from day one. The same investor may need one now and the other in three years.

Buy the asset first. Let the tax treatment tip a close decision, not make it. 

The one-page decision matrix 

A filter, not a formula. Rows 1–3 carry the most weight; if they agree, that's your answer. If they split, the tax treatment tips it.

Source: High Income Property

Disclaimer: High Income Property is a buyer-side residential property advisory, helping clients acquire established properties and new home-and-land packages. Depending on the service, we are paid either directly by the client or by the builder. Any builder-paid arrangement is disclosed upfront. This is general property and finance commentary informed by my banking background; it is not personal financial, credit or tax advice. 

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