Macquarie and Westpac have already changed investor serviceability settings following the Federal Budget reforms.
Some investors could see borrowing power reduced if negative gearing benefits are no longer included in lender calculations.
Existing investors with grandfathered properties may not be affected, but pre-approvals should still be reviewed.
Not all lenders are responding the same way, which lender you approach right now could mean a significant difference in borrowing capacity.
If you're a property investor, something important has already happened, and most people haven't noticed it yet.
While the proposed negative gearing and Capital Gains Tax (CGT) reforms are not yet legislated, several major lenders have already started adjusting how they assess investor borrowing capacity.
Two of Australia's major banks, Macquarie and Westpac, have already begun responding to the Federal Budget's negative gearing reforms by adjusting how they communicate and calculate investor borrowing capacity. NAB, CBA, and ANZ have confirmed they are reviewing their settings.
For investors, this could affect borrowing power, pre-approvals, and future investment strategy sooner than expected.
Importantly, the reforms announced in the Federal Budget are still subject to legislation and parliamentary approval. Final policy settings may change. Investors should seek independent financial, tax, and legal advice before making decisions.
The information in this article is based on publicly available information as of May 2026.
What actually changed in the Federal Budget?
The Federal Budget announced proposed reforms to negative gearing and Capital Gains Tax arrangements for future investment property purchases.
Under the proposed changes, negative gearing concessions would only remain available for eligible new build residential properties purchased after Budget night.
Investors who purchase established residential properties after 7:30pm AEST on 12 May 2026 would no longer be able to offset rental losses against salary or wage income from 1 July 2027.
Instead, losses would generally only be able to offset future rental income or capital gains from property assets.
The Budget also proposed changes to Capital Gains Tax treatment. The Treasury factsheet confirms the current 50% CGT discount would be replaced with a CPI-linked cost-base indexation model and a minimum 30% tax on real gains accrued after 1 July 2027 for affected assets.
However, these measures are proposals only and have not yet become law.
Why are banks already changing lending settings?
Banks don't wait for Parliament. They move when the risk landscape shifts, and right now, it has.
Lenders regularly review serviceability models to reflect expected changes in borrower risk, household cash flow, and responsible lending obligations.
In this case, if future investors may no longer receive the same tax benefits from negative gearing, lenders may decide to reduce or remove how those benefits are treated within borrowing calculations.
Macquarie Bank confirmed to industry publications The Adviser and Mortgage Professional Australia that it has removed negative gearing tax add-backs from investor serviceability calculations for established property loans contracted after 12 May 2026.
Westpac has notified its home lending teams that the proposed negative gearing changes could reduce borrowing capacity for investor clients.
While the bank has not yet formalised a policy change, Capital Brief reported that Westpac had advised teams to stop counting negative gearing in some investor serviceability assessments for established properties.
You might also be interested in: How the Federal Budget is influencing property investment decisions
Where the major banks currently stand
Bank | Current reported position | Reported action |
|---|---|---|
Macquarie | Policy changed | Removed some negative gearing tax add-backs from investor serviceability assessments |
Westpac | Under review | Reportedly has advised its home lenders there might be changes in the future, but brokerage policies had not been changed yet |
CBA | Under review | Reviewing serviceability settings |
NAB | Under review | Confirmed policy settings under review |
ANZ | Under review | Reviewing lending appetite and policy settings |
Sources: The Adviser, Capital Brief, Yahoo Finance
Because lending policies can change quickly, investors should confirm their position directly with their lender or broker before making purchasing decisions.
Why the lender you choose matters more than ever
Not all lenders are adjusting their serviceability calculators at the same pace or in the same way. For investors, this means the lender you approach, and when, can have a material impact on what you're actually able to borrow.
To illustrate what that difference could mean in dollar terms for the same borrower, here's a hypothetical comparison across lenders at different stages of policy adjustment:
Area | Lender A | Lender B | Lender C |
|---|---|---|---|
Position | Policy already changed | Under review | Not yet adjusted |
Investor income | $120,000 | $120,000 | $120,000 |
Negative gearing add-back included? | No | Partial | Yes |
Estimated borrowing capacity | ~$575,000 | ~$640,000 | ~$720,000 |
Variance vs. most conservative | — | +$65,000 | +$145,000 |
This is illustrative only and does not represent actual lender policy or loan approval. Lender settings are changing week to week.
This is where working with an Aussie Broker makes a practical difference. When you approach a single bank, you get one set of serviceability settings. If that bank has already adjusted its investor calculator, that is your only option.
An Aussie Broker has visibility across 25+ lenders** and tracks how each one is responding to the proposed reforms as policies change. That means your situation can be matched to the lender whose current settings may work best for you, based on where things actually stand today.
For investors, that kind of access could mean thousands of dollars more in borrowing capacity, on the same income and the same property.
What this could mean for borrowing power
Negative gearing has historically been treated as additional assessable income within some lender calculators because the tax refund may improve household cash flow.
If lenders stop recognising those tax benefits, some investors could see reduced borrowing capacity.
To understand why borrowing power changes, it helps to see how lenders have historically treated negative gearing in serviceability calculations, and what removing it actually does to the numbers.
When a property is negatively geared, the investor makes a net rental loss. Under previous lender settings, the annual tax refund generated by that loss was treated as additional assessable income, effectively boosting the borrower's serviceable income and therefore their maximum loan amount.
Here's how that works in practice for an investor earning $120,000 annually.
Step | Detail | Amount |
|---|---|---|
Annual rental income | Rent received on investment property | $26,000 |
Annual holding costs | Interest, rates, insurance, management fees | -$40,000 |
Net rental loss (negative gearing) | Holding costs minus rental income | -$14,000 |
Tax benefit at 37% marginal rate | Annual loss × marginal rate = annual refund | +$5,180/yr |
Monthly add-back to assessable income | Tax benefit treated as income by lender | +$432/mo |
Borrowing capacity with add-back | Established property, investor on $120K salary | ~$720,000 |
Borrowing capacity without add-back | Same borrower, add-back removed by lender | ~$575,000 |
Reduction | Difference in borrowing capacity | ~$145,000 (-20%) |
This example assumes an investor earning $120,000 annually purchasing an established residential property. The tax add-back rate applied is 37%, consistent with the marginal tax rate for this income level. This is illustrative only and does not represent an actual loan assessment. Borrowing capacity depends on individual income, existing debts, living expenses, lender policy, and the specific property. Speak to an Aussie Broker for a calculation based on your own situation.
Who may be affected most?
The proposed reforms may affect different investors in different ways depending on when they purchased property, what type of property they buy, and how they structure their investments.
Investors who may be impacted
Based on the proposed Budget reforms, the following groups may be most exposed to the proposed changes:
Investors purchasing established residential properties after 12 May 2026
Borrowers relying on negative gearing tax offsets to improve serviceability
Investors using rental losses to reduce taxable salary income
Investors currently relying on older pre-approvals that may no longer reflect updated lender settings
Investors who may be less affected
The proposed reforms also indicate some groups may remain protected or retain access to concessions, including:
Existing investors with grandfathered properties contracted before Budget night
Eligible new build investors
SMSFs and some widely held trusts
Certain build-to-rent and government housing projects
You might also be interested in: CGT indexation is back – What it means for your investment property
What investors can do right now
1. Review your pre-approval
If your pre-approval was issued before the Budget announcement, it may have been assessed under previous lending settings.
Given some lenders have already adjusted serviceability calculations, it may be worth reviewing your position before making an offer or signing a contract.
An Aussie Broker can check your pre-approval against current lender settings across the panel, not just the lender who originally approved it.
2. Understand whether you are grandfathered
According to the proposed reforms, investors who already owned investment properties before the Budget cut-off may continue under existing tax arrangements for the life of the asset.
This means not every investor will be affected equally.
3. Reassess cash flow assumptions
Some investors may need to place greater emphasis on rental yield and cash flow rather than relying on tax refunds to support affordability.
Under the proposed framework, stronger yielding markets may become more attractive to some investors.
4. Consider new build opportunities carefully
The government has proposed retaining negative gearing concessions for eligible new build properties.
However, investors should still complete thorough due diligence.
The Treasury factsheet confirms, only properties that genuinely qualify as new builds under the government's definition retain access to negative gearing concessions.
Not every new build investment carries the same risk profile. Factors such as developer quality, vacancy rates, rental demand and construction timelines still require careful assessment.
5. Speak with both a broker and accountant
The proposed changes involve both lending policy and taxation considerations.
A broker may help explain how lenders are currently assessing borrowing capacity, while an accountant can explain how the proposed reforms may apply to your individual tax position.
6. If you hold multiple properties, review your refinancing position
Reduced borrowing capacity doesn't only affect new purchases, it can affect your ability to refinance existing loans.
Investors who hold multiple properties and built their portfolio under previous serviceability settings may find that refinancing, whether to access equity, restructure debt, or secure a better rate, is now assessed differently under updated lender calculators.
If you've been considering a refinance, reviewing your position now, before more lenders adjust their settings, may give you access to a broader range of options.
An Aussie Broker can assess your current position across the panel and identify whether refinancing remains viable and at what terms.
Timing matters here. Waiting until more lenders have moved could mean fewer options to choose from.
Common misconceptions about the reforms
Myth: “Negative gearing has been abolished”
This is not entirely accurate.
Under the proposed reforms, negative gearing would still remain available for existing grandfathered investments and eligible new builds.
Myth: “My family home will now be subject to CGT”
The Federal Budget confirmed the main residence exemption for owner-occupiers remains unchanged under the proposed reforms.
Myth: “All investment deductions are gone”
The reforms specifically target how rental losses may be offset against salary income for affected investors.
Other common deductions, including depreciation, maintenance costs, council rates, insurance and property management fees, would still generally remain deductible under current proposals.
Myth: “Existing investors should sell immediately”
Some commentary following the Budget has suggested investors should rush to sell before the reforms commence.
However, the proposed CGT changes only apply to gains accrued after 1 July 2027. Gains accrued up to that date would still remain eligible for the existing 50% CGT discount under the proposed framework.
That means investors who sell today may crystallise a less favourable tax outcome by giving up access to the current discount on gains already accrued, while also potentially triggering selling costs, stamp duty on replacement purchases and other transaction expenses.
Investors should seek independent financial and tax advice before making reactive decisions.
Myth: “My SMSF investment property will be affected by both reforms”
Some SMSF trustees have expressed concern that both the negative gearing and CGT reforms may significantly affect property held within superannuation.
Tax advisory firm Pitcher Partners stated that SMSFs are proposed to be excluded from the negative gearing changes.
Super funds already operate under different tax settings, including concessional tax rates, which means the impact may differ significantly from direct individual investors.
The interaction between the proposed CGT indexation model and superannuation tax rules is still being clarified, so SMSF trustees should seek advice specific to their fund structure and circumstances.
You might also be interested in: Should you buy an investment property before 1 July 2027?
Why lender choice matters more than ever right now
Despite the changes, Australia's rental vacancy rates remain tight across most capital city markets, and the fundamentals of well-selected investment property remain intact. What's changed is the strategy and right now, the lender you choose is a bigger part of that strategy than it's ever been.
The difference between the right lender and the wrong one isn't rate, it's whether they've adjusted their serviceability calculator yet. That's exactly the kind of thing an Aussie Broker knows, because they're watching the whole market, not just one lender.
An Aussie Broker can help you:
Review your borrowing capacity under current lender settings
Reassess an existing pre-approval
Compare lender policy differences across available options
Understand how serviceability calculations may differ between lenders
Explore loan options across 25+ lenders that may suit your circumstances
Importantly, lender policies may continue evolving while the proposed reforms move through the legislative process.
For investors considering purchases, equity access or refinancing, the gap between lenders is wider than it's been in years.
Reviewing your position now, before the rest of the major banks finalise their settings, is the smartest move you can make this week.
