Investors · Established Property · Buyers Advocacy
Existing Homes vs New Builds
Anyone can buy a property. We help identify property worthy of your investment dollars.
A beautiful established home on a leafy street, with a garden to match. It looks like an excellent investment. Add the 2027 negative gearing changes, higher maintenance, energy upgrades, lower rent and less depreciation, and the numbers often tell a very different story.
Image: Philip Mallis, CC BY-SA 2.0, via Wikimedia Commons (converted to black and white)
Emotion vs the numbers
“Whenever you apply emotion to any decision, especially when it comes to investing, you’re guaranteeing yourself a lower return on investment, but only 100% of the time.”
— Stephen Lazar, properT network
A neat garden and period charm make a lovely home. They don’t make the numbers work. Investors who feel they need to live near their investment, or drive past it, often pay for that feeling in lower rent, higher holding costs and a slower path to the next property.
The 2027 changes
Negative Gearing Now Favours New Builds
The negative gearing and capital gains tax changes announced in the 2026–27 Budget are now law. From 1 July 2027, if you buy an established residential property after 7:30pm AEST on 12 May 2026, its rental losses can no longer be deducted against your wages or other income.
Those losses can only be offset against residential property income, such as net rent from other residential properties and capital gains. Anything left over is carried forward to future years, and can be lost altogether if there is never enough property income or gain to use it.
New builds keep full negative gearing, and investors in new builds can choose between the 50% capital gains discount and the new indexation method. Properties held before the announcement are grandfathered.
What it means for you
You Fund the Whole Shortfall
To hold an established property bought after 12 May 2026, you now need enough surplus cash flow to cover the gap between rent and outgoings every year, with no tax refund to soften it, unless you already earn net rental income from other residential property.
The loss isn’t gone. You just have to wait to use it. Meanwhile, the money comes out of your pocket, and that affects what the bank will lend you next.
Cash flow builds portfolios
Why Relying on Capital Growth Alone Can Hold You Back
Many investors buy an older home and count on capital growth to do the heavy lifting. But a property that drains your cash flow can stop you buying the next one.
One cash-flow-stringent property
Lower rent, higher outgoings, little depreciation and, from 2027, no tax refund on the loss. Every month you top it up, your serviceability weakens and the bank says “not yet” to your next loan. Your wealth depends on one asset growing.
A cash-flow-neutral portfolio
New builds with stronger rent, full depreciation and negative gearing can run close to neutral or even positive after tax. That keeps your borrowing capacity intact, so you can go back to the bank sooner for your second, and perhaps third, property.
Stronger cash flow
Higher rent, full depreciation and negative gearing reduce what you put in each year.
Borrowing power kept
Lenders assess your whole position. Less shortfall means more capacity.
The next property sooner
Secure your second and third assets years earlier than with one cash-hungry property.
Compounding returns
Growth on several assets, not one, compounds your return on the money you’ve invested.
Illustration only: $700,000 of property growing at 6% a year adds about $42,000 in value. Three properties worth $2.1 million at the same rate add about $126,000. Owning more well-chosen assets, held comfortably, is how a portfolio can outpace the 5% to 7% a year many investors expect from a single property. Growth is never guaranteed.
Side by side
Established Home vs New Build
The same street, the same suburb, two very different investments.
| Established home | New build | |
|---|---|---|
| Negative gearing (bought after 12 May 2026) | From 1 July 2027, losses offset only against residential property income; the rest carried forward | Full negative gearing against wages and other income |
| Capital gains tax | Indexation with a minimum 30% tax on real gains accruing from 1 July 2027 | Choice of the 50% discount or indexation |
| Depreciation | Capital works only, on the building’s remaining life. No plant and equipment on previously used items | Full capital works and plant and equipment |
| Maintenance | Higher and less predictable: roofs, plumbing, wiring, hot water | Low in the early years |
| Builder warranty | None | Statutory warranties, e.g. up to 10 years in Victoria and 6 years for major defects in NSW |
| Energy efficiency | Often below today’s standards. Upgrades may be required for tenants | 7-star NatHERS and a whole-of-home energy budget |
| Rent | Generally lower than a new home next door | Generally higher, with stronger tenant demand |
| Stamp duty | Full duty on the full price | Concessions in several states; on house and land, duty usually on the land only |
| In ten years | Ten years older again. Much of the value may be in the land | Still ten years younger than the house next door |
Tax rules depend on your circumstances and the final detail of the legislation. Always get advice from your accountant before you buy.
The hidden costs
What an Older Home Really Costs to Hold
The purchase price is only the start. These costs come out of your cash flow every year.
Higher maintenance
Ageing roofs, plumbing, wiring, hot water systems and fittings mean more repairs, often unplanned.
Energy upgrades
Councils and states are lifting standards. Victoria’s rental minimum energy efficiency standards start from 1 March 2027.
Lower rent
Tenants generally pay less for an older home than for a new one next door, so the yield is lower.
Less depreciation
No deductions for previously used plant and equipment, and limited or no capital works on older homes.
No builder warranty
Major defects are your problem. There is no builder to call back.
A bigger shortfall
Lower rent plus higher outgoings means more of your own money each month, and from 2027, no tax refund on the loss.
Comfort costs money
Keeping Tenants Warm in Winter and Cool in Summer
Older homes were built to lower standards. Without insulation, efficient heating and cooling, and good draught sealing, they are cold in winter, hot in summer and expensive to run. Tenants notice, and so do the rules.
New homes are built to a 7-star NatHERS rating with a whole-of-home energy budget, so they are cheaper to live in and easier to lease.
Victoria from 2027
- Ceiling insulation. Minimum R5.0 in uninsulated ceilings for new leases from 1 March 2027.
- Heating and hot water. Failed systems must be replaced with efficient electric options from 1 March 2027.
- Cooling. Efficient fixed cooling in the main living area for new agreements from 1 March 2027, and all rentals by 1 July 2030.
- Draught-proofing. Gaps around external doors, windows and vents sealed from 1 July 2027.
The ten-year rule
A home built today will be ten years old in a decade. The one next door, built ten years ago, will then be twenty.
That age gap never closes. It shows up in maintenance bills, energy costs, depreciation and the rent a tenant is willing to pay.
Your exit strategy
The Ten-Year Rule When You Sell
Every investment needs an exit. Think about who will buy your property, and what they will pay, a decade from now.
Ten years older again
When you sell, the established home is now ten years older than it is today, and ten years older than the new home next door, which buyers and valuers will compare it with.
Value drifts to the land
As a house ages, more of its value sits in the land. By the time you sell, an older home may achieve little more than land value.
A newer home sells easier
A home that is still relatively new appeals to owner-occupiers and investors, with more depreciation left and lower maintenance ahead.
Set on an existing home?
Our Buyers Advocacy Service
Some investors and home buyers still want an established home, and in the right location, with the right numbers, it can make sense. If that’s you, properT network can go to market on your behalf.
Tell us exactly what to look for and where, or let us recommend locations that match your budget and investment strategy. We search, assess, negotiate and manage the purchase through to settlement.
Your brief
Budget, property type, must-haves and the locations you want, or are open to.
Strategy & location
We match the brief to your investment strategy and recommend locations if you’d like.
Search & assess
On and off-market searching, due diligence and honest numbers on every option.
Negotiate & secure
We negotiate the price and terms and manage the purchase to settlement.
If you buy established
Check These Before You Commit
If an established home is still your choice, these are the questions we work through with you.
- Your purchase date. Bought after 12 May 2026? Model cash flow under the 2027 rules, with no tax refund on losses
- After-tax cash flow. Can you fund the shortfall comfortably every year, at today’s 4.60% cash rate and higher?
- Building and pest. Get a thorough inspection and price the repairs before you sign
- Energy upgrades. Insulation, heating, cooling, hot water and draught-proofing to meet rental standards
- Rent vs new nearby. Compare the rent with new homes in the same street or estate
- Depreciation. Order a depreciation schedule to see what you can actually claim
- Land value. A high land-to-asset ratio supports growth, but the house still has to be leasable
- Exit. Who buys it in ten years, and what will it be worth next to newer homes?
Read: How to identify an investment-grade property · Strategy Before Property
Where we can help
New Builds Across Australia
We research selected markets across the country. Start with the state or region that fits your strategy.
Read more
Questions
Existing Homes vs New Builds FAQs
Can I still negatively gear an existing property?
If you held it before 7:30pm AEST on 12 May 2026, yes: it is grandfathered. For established residential property bought after that time, from 1 July 2027 rental losses can only be offset against residential property income, such as net rent from other residential properties and capital gains. Any excess is carried forward. New builds keep full negative gearing.
What counts as a new build under the new rules?
Broadly, newly constructed homes that add to housing supply, such as off-the-plan apartments, new house and land, and newly built homes with limited prior occupation. Extensions to established homes and granny flats added to established properties generally don’t qualify. The detail matters, so get tax advice before you buy.
Do established properties still attract depreciation?
Partly. Capital works deductions are generally available for residential buildings built after 15 September 1987, for the remaining life of the building. But plant and equipment in a previously used residential property, such as appliances and carpets, generally can’t be claimed by investors who bought after 9 May 2017.
Why do new homes usually rent for more?
Tenants pay for comfort and lower running costs. A new home has modern layouts, efficient heating, cooling and hot water, and a 7-star energy rating, so it is cheaper to live in and easier to lease than an older home next door.
Is an existing home ever the better choice?
It can be: scarce inner-ring land, genuine renovation or development potential, or a home you plan to live in. The numbers still have to work, especially cash flow under the 2027 rules. If you’ve decided on an established home, our buyers advocacy service can find and secure it for you.
What is the ten-year rule?
A home built today will be ten years old in a decade. The one next door, built ten years ago, will then be twenty. That gap never closes, and it shows up in maintenance, energy costs, depreciation, rent and, eventually, the price a buyer will pay.
Make an enquiry
Talk to Us: New Build or Established?
Tell us your budget, where you’d like to invest and what you have in mind. We’ll run the numbers on new and established options, or go to market for you through our buyers advocacy service.
- No obligation
- Cash flow under the 2027 rules explained
- New builds Australia wide
- Buyers advocacy for established homes
New or Established Enquiry
Takes about a minute.
Your details are used only to respond to your enquiry. Disclaimer & Privacy
Anyone can buy a property
We Help Identify Property Worthy of Your Investment Dollars
Investor → Strategy → Location → Property.
General information only. properT network does not provide personal financial, legal, tax or lending advice. Grants, stamp duty, lending, planning and tax rules vary by state and change over time. Property investment carries risk, including the risk of loss. Seek independent professional advice before making any decision.
One Network. Nationwide Reach.
