Quick answer: new and established properties can both work, so compare the land value, local supply, cash flow and tax for the actual property. From 1 July 2027 negative gearing for residential property is limited to new builds, but depreciation on a new build is not free money, and land is what usually drives growth.
Updated 28 October 2026. Tax rules checked on the Australian Taxation Office website on the same day.
Key facts, checked 28 October 2026
Three dated facts change how new and established investment properties compare: the negative gearing and capital gains tax reforms that are now law, the capital works deduction for new buildings, and the limit on depreciating assets in second-hand rental properties. Each comes from an ATO page checked on 28 October 2026.
- These measures are now law. From 1 July 2027, negative gearing for residential property is limited to new builds, and properties held at 7:30pm AEST on 12 May 2026 are exempt from that change (ATO, page updated 29 June 2026).
- From 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced with cost base indexation and a 30% minimum tax rate on capital gains, applying to gains that accrue after that date (ATO, page updated 29 June 2026).
- You can generally claim a capital works deduction of 2.5% a year for 40 years from when construction was completed, but in most cases you cannot claim a deduction for second-hand depreciating assets in a residential rental property after 1 July 2017 (ATO capital works and ATO second-hand assets, pages updated 22 June 2026).
New vs established property: the main differences
A new build is a newly built property or one still being built. An established property has already been lived in. The main differences are the share of the price that is land, the maintenance you face, the tax deductions available, the wait before you can rent it out, and the risks you carry.
| Question | New build | Established property |
|---|---|---|
| Share of the price that is land | Often lower, because you also pay for a new building | Often higher, especially an older home on a larger block |
| Maintenance in the early years | Often lower, and many new builds come with a builder warranty | Depends on age and condition, so repairs can be higher |
| Tax deductions | Capital works deduction plus deductions on new fittings | Capital works deduction may apply; deductions on second-hand fittings are generally not available |
| Negative gearing from 1 July 2027 | Allowed for new builds | Limited, unless you held the property at 7:30pm AEST on 12 May 2026 |
| Time before it earns rent | Can be months or longer if it is still to be built | Usually soon after settlement |
| Main risks | Delays, valuation at settlement, builder problems and new supply nearby | Hidden defects, pests and older fittings, which a building and pest inspection helps you find |
Which grows more in value: new or established?
Growth is driven mostly by land, because land is limited and buildings age. A property with a high land share, in an area with strong demand and little new supply, tends to hold value better. A new build can still grow, but you pay for the building and wait for it to finish.
Demand for property rises with population growth, good locations, job opportunities and land scarcity. It falls when there is plenty of available stock, when affordability gets worse, or when a location loses its appeal.
Whether you buy new vs established, the amount of new stock coming onto the market matters. While a lot of homes are being approved and built nearby, supply can run ahead of demand and hold prices back. Before you buy, check how many developments are approved or under way in the suburb and the surrounding area.
Land and buildings behave differently. Land does not wear out, and no more of it can be made in an established area, so it is the main source of long-term growth. A building ages, needs maintenance and eventually needs major work, so over time more of a property's value tends to come from the land it sits on.
Example: growth on a new and an established house bought at the same price
As an illustration, assume two properties cost $1,000,000 each and land grows 7% a year. The new house is $500,000 of land and $500,000 of building; the established house is mostly land. The established house's land share gives it more growth in year one.
Say the established house is over 30 years old and the new house is still to be built. The new house costs $500,000 for the land plus $500,000 for the build, a total of $1,000,000. The established house and land also cost $1,000,000, and most of that price is land. If land grows 7% a year, the established house's land adds about $70,000 in the first year, while the new house's $500,000 of land adds about $35,000.
A new build can also take a long time to finish, and during construction you cannot rent it out. The established house can start earning rent soon after settlement. The numbers above are arithmetic on assumed figures, not a forecast: real growth varies by suburb and over time, and a finished building adds value too. Before you buy either, work out the running costs, using our guide to the cost of owning a house.
After the build is finished: what happens to growth?
Once a new build is finished, growth depends on how much stock the developer is still selling nearby and on what similar properties sell for. Ask for recent sales of comparable homes, check the valuation before settlement, and be ready for the possibility that the finished property values below the contract price.
If developers are still releasing and selling stock in the suburb, new supply can keep prices flat until it is absorbed. That can take years, so a new build in a suburb with a lot of similar stock for sale may take longer to show growth than an established home in a suburb with little new supply.
Tax depreciation is a separate question. The ATO says that as a general rule you can claim a capital works deduction for the cost of construction for 40 years from the date construction was completed, at 2.5% a year for construction since 16 September 1987. That deduction is a tax claim, not a measure of what the building would sell for.
In the example above, the new house's $500,000 build would give a first-year capital works deduction of about $12,500 at 2.5%. That reduces your taxable income a little, but it does not add to the value of the property, and it comes after the build is complete.
Depreciation and tax: what a new build really gives you
A new building can give you a capital works deduction of 2.5% a year for 40 years, plus deductions on new fittings. These are tax deductions, not cash in your pocket, and you must take claimed capital works deductions into account when you work out your capital gain. A quantity surveyor's depreciation schedule shows what you can claim.
Many people ask about the depreciation and negative gearing benefits of a new property, and the advertising often promises you will pay no tax. A deduction lowers your tax by a share of the amount, based on your tax rate, so a $1 deduction saves you cents, not a dollar. The deductions are real, but they do not turn a poor investment into a good one.
Ask who is paid when you buy. Some people who promote new properties are paid by the developer or builder, which is different from an independent buyers agent who is paid by you. Ask for the depreciation schedule, the full numbers in writing and the contract, and get independent advice from an accountant and a solicitor or conveyancer before you sign.
Depreciation is also not free money. The ATO says that if you claim a capital works deduction you need to take it into account when you work out your capital gain or loss, so some of the benefit can come back when you sell. For second-hand properties, the ATO says that in most cases you cannot claim a deduction for second-hand depreciating assets in a residential rental property after 1 July 2017, so an established rental generally has fewer deductions to claim.
Negative gearing and capital gains tax from 1 July 2027
The negative gearing and capital gains tax reforms are law. From 1 July 2027 negative gearing for residential property is limited to new builds, and properties held at 7:30pm AEST on 12 May 2026 are exempt. The 50% CGT discount is replaced by cost base indexation and a 30% minimum tax rate for gains accruing after that date.
This changes the new vs established question, because new builds keep negative gearing while most established purchases made after the announcement lose it from 1 July 2027. The ATO page does not say what counts as a new build, so ask your accountant how the rules apply to the property you are looking at before you buy.
Negative gearing means the rent does not cover the costs, so the property makes a loss each year. The tax deduction softens that loss but does not remove it, because you still put in cash every week. Choose a property you can afford to carry whatever the tax rules are, and let the long-term growth be the reason you invest.
For more on this, read our guide on why running your property investing at a loss is a bad idea.
A property that earns more rent than it costs pays some tax on that profit, but you are still better off than with a property that makes a loss. If rent and growth are weak in an area, no tax deduction makes up for it: see our article on investor markets with less growth and less rent.
Understanding equity: borrowed money, not income
Equity you draw from a property is borrowed money, not income, so it is not taxed when you take it out. Interest on a loan used to buy an income-producing investment is generally deductible, but you still have to repay the loan and afford the repayments if rates rise.
Tax on growth in the value of a property is capital gains tax, and it applies when you sell, not when you borrow against the property. When you take out equity through a loan you are using your property as security and paying interest on the new loan. Keep a buffer for higher rates and for the months a new build is not earning rent.
How to choose between new and established
Choose by the numbers for the actual property, not by whether it is new. Compare the land value, the rent against the costs, the nearby supply, the tax rules that apply to you and the risks you can carry. An independent buyers agent can run these checks for you before you offer.
- Work out the land value and the building value separately.
- Check how many similar homes are approved or for sale nearby.
- Calculate the weekly cash flow after rates, insurance, management and loan interest.
- Ask your accountant how the 1 July 2027 negative gearing and capital gains tax changes affect you.
- For an established home, get a building and pest inspection; for a new build, check the contract dates and the valuation before settlement.
More questions about new vs established investment property
What are the risks of buying off the plan?
The main risks are delays, a valuation at settlement that comes in below the contract price, changes to the finished product, and a lot of similar stock for sale nearby. Read the contract's completion dates and what happens if the project is late, and have a solicitor or conveyancer review it before you sign.
How long does a new build take?
It varies by builder, site and weather, and it can run well past the first estimate. Ask for the contract's completion date, what happens if it is late, and when you would be able to rent the property out, then allow for loan repayments in the meantime.
Is the depreciation on a new build worth it?
It helps your cash flow a little, but it is a tax deduction, not income, and capital works deductions you claim are taken into account when you work out your capital gain. A quantity surveyor's schedule shows what you can claim. Judge the property on land value, rent and growth first, and treat depreciation as a bonus.
Should I use a buyers agent for a new build or an established property?
An independent buyers agent is paid by you, not by a developer, and can compare the land value, supply, rent and risks on both options before you offer. Our investment property buyers agent service does this for investors.
Choosing between new and established property does not have to be daunting. It comes down to careful checks of the facts, the likely returns and the costs. Property investing is not a get-rich-quick scheme: it is a steady path to building wealth that rewards patience and good information.
Wealth Through Property helps investors compare new and established options before they commit. Whichever you choose, what matters most is making informed decisions on the numbers for the actual property. Start with our home page or the investment property buyers agent service.
Ready to start your wealth building journey through property today? Book a free consultation with Wealth Through Property now and let their experts assist you in making the best investment decisions based on your unique needs.
Sources
- ATO: Tax reform boosting home ownership, reforming negative gearing and capital gains tax (last updated 29 June 2026, checked 28 October 2026)
- ATO: Work out your capital works deductions (last updated 22 June 2026, checked 28 October 2026)
- ATO: Second-hand depreciating assets (last updated 22 June 2026, checked 28 October 2026)
This article is general information and is not financial, tax or legal advice. Tax rules change and the examples use assumed figures; speak to a licensed accountant, solicitor and lender before you buy.
Happy investing!