One of the biggest property stories following the 2026 Federal Budget has been the Government’s changes to negative gearing and what they could mean for commercial property.
From 1 July 2027, negative gearing for residential property will generally be limited to new builds. Properties held before 7:30pm on 12 May 2026 are grandfathered under the existing arrangements.
Commercial property is not subject to the same negative gearing restriction, potentially making assets such as industrial units, retail shops, offices and medical premises more attractive to investors considering where to put their next dollar.
Could investors shift towards commercial?
The changes could encourage some traditional residential investors to take a closer look at commercial property, particularly smaller assets that offer an accessible entry point into the sector.
However, the broader investment environment remains challenging. Interest rates are still elevated, with the RBA holding the cash rate at 4.35% in August, and investors continue to be selective.
There are also changes coming to Capital Gains Tax from July 2027, meaning investors will need to consider the overall tax and investment position rather than focusing solely on negative gearing.
What does it mean for commercial property?
For commercial agents, the changes create an opportunity to start conversations with a new group of investors.
Residential investors who may never have seriously considered commercial property could now be looking at industrial, retail, office and other commercial assets as part of their investment strategy.
With tax settings changing and borrowing costs remaining high, education and good advice will be increasingly important. For investors considering their next move, commercial property may now deserve a closer look.
Thinking about buying, selling or investing in commercial property? Contact the My Agent Aus team to discuss the opportunities currently available.