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Buying Off the Plan in Australia Under the 2027 Tax Rules

27 October 2026 · AgentBridge · Tax Reform Act 2026

What changes on 1 July 2027

Rule	Was (Before the 2026 tax reform)	Now (Tax Reform Act 2026)
Rental losses on a dwelling you let out	Deductible against other income	From 2027-28, quarantined for established dwellings last acquired after 7.30 pm ACT legal time on 12 May 2026; new dwellings are exempt, and under the Tax Reform No. 3 Bill, which is not yet law, an off-the-plan purchase may count as new
Off-the-plan contract signed before 7.30 pm ACT legal time on 12 May 2026	No cut-off date	Grandfathered: ownership counts from the contract date, even when settlement comes later
CGT when you later sell	50% discount on property held 12 months or more	Owners of new residential dwellings can choose to keep the 50% discount instead of indexation plus the 30% minimum tax; other property moves to cost base indexation plus a 30% minimum tax for resident individuals, for CGT events from 1 July 2027
Definition of a new dwelling	Not relevant to tax	Not yet law: the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, introduced on 14 October 2026, uses acquisition within 24 months of the certificate of occupancy first being issued

Affects: Buyers who rent out an off-the-plan or other new dwelling from the 2027-28 income year or sell one from 1 July 2027; and off-the-plan buyers whose contract was signed before 7.30 pm ACT legal time on 12 May 2026. Everything else is unchanged.

Previous edition (Before the 2026 tax reform)Buying Off the Plan in Australia. The Complete Process for 2026

Buying Off the Plan in Australia Under the 2027 Tax Rules

Buying off the plan means signing a contract to buy a property that has not yet been built. The buyer commits today at a price set today, the developer builds over 18 to 36 months and settlement happens when the building is complete and the title is registered. The process is structurally different from buying an established property: a longer contract gap, a sunset clause that governs what happens if the build runs late and a fresh finance approval at settlement against a valuation done at that point.

This edition is written as at 27 October 2026. It replaces our earlier guide, which was written before the tax changes passed in June 2026. The process steps are unchanged and are carried over here, with a new section on what the changes mean for a dwelling bought off the plan.

Off the Plan. A property purchase where the buyer signs a contract before the building is constructed or the title is registered. The buyer pays a deposit (often 10%) at exchange and the balance at settlement, after construction is complete and the title is created. A sunset clause sets the latest date by which the title must be registered.

What Changed

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026 as Act No. 49 of 2026. Two parts of it matter to off-the-plan buyers. From the 2027-28 income year, rental losses on established residential dwellings will be quarantined rather than deducted against other income, with new dwellings exempt. For CGT events from 1 July 2027, the 50% CGT discount will be replaced by cost base indexation plus a 30% minimum tax for resident individuals, but owners of new residential dwellings will be able to choose to keep the 50% discount instead of indexation.

The definition of a "new" dwelling is not yet law. Treasury released a draft for consultation on 4 August 2026 and the definition is now in Schedule 5 to the Treasury Laws Amendment (Tax Reform No. 3) Bill 2026, introduced to the House of Representatives on 14 October 2026. The Bill's explanatory memorandum, like the draft, says the definition may apply where someone buys an off-the-plan unit, depending on when the certificate of occupancy is issued and when they settle. The Bill has been referred to the Senate Economics Legislation Committee, which is due to report on 13 November 2026, and it may still change. This article makes no recommendation about buying off the plan because of these rules.

The Off-the-Plan Process in Australia, Step by Step

The process has seven stages. Each one has its own decisions and its own risks.

Step 1. Display Suite Inspection and Contract Request

Off-the-plan stock is marketed from a display suite, a sales office or a project marketing agency's portal. The buyer inspects the floor plans, the finishes schedule and a display apartment if one exists, then requests a contract pack. The pack contains the contract of sale, the vendor disclosure statement (its name varies by state), the schedule of finishes, the body corporate or owners corporation disclosure and the draft strata or community title plan.

The contract pack is not binding. It is reviewed by the buyer's conveyancer or solicitor before any commitment is made.

Step 2. Contract Review

This is the most important step in the process. An off-the-plan contract commits the buyer to a property that does not yet exist and three clauses sit at the centre of the review.

The sunset clause sets the date by which the title must be registered. If it is not registered by then, either party may have rights to end the contract. Sunset clause law has been reformed at state level. In NSW, for example, the Conveyancing Act lets a developer rescind under a sunset clause only with each buyer's written consent or a Supreme Court order, after 28 days' written notice. Our guide to sunset clauses in off-the-plan contracts covers the state-by-state position.

The variation clause sets out what the developer can change between contract and completion. Finishes, layouts and inclusions are commonly subject to a "substantially in accordance with" standard. The conveyancer flags what the buyer can object to.

The deposit clause sets the deposit amount, its form (cash, bank guarantee or deposit bond), where it is held (trust account or stakeholder) and what happens to it if the contract is ended.

Step 3. Contract Exchange and Deposit

Once satisfied with the contract, the buyer signs and exchanges with the developer and pays the deposit. The NSW Government states that an off-the-plan deposit must be held in a trust or controlled money account and cannot be released to the vendor before settlement. Consumer Affairs Victoria states that a Victorian off-the-plan deposit can be no more than 10% of the price. Some contracts accept a bank guarantee or deposit bond instead of cash.

At exchange the buyer is contractually committed, subject to any cooling-off period. Cooling-off rules differ by state: in NSW, off-the-plan buyers have a 10 business day cooling-off period, longer than the 5 business days for most other contracts. The review at Step 2 is still where the buyer has the most say. See our deposit guide for how deposits are held.

The exchange date now matters for tax as well. For the negative gearing grandfathering test, an off-the-plan buyer's ownership counts from the date the contract is entered into, not settlement (see the tax section below).

Step 4. The Contract Gap

The contract gap is the period between exchange and settlement. For an apartment it commonly runs 18 to 36 months, while the developer builds. The buyer's obligations are limited to maintaining the deposit and responding to contract notices.

It is also the period in which the buyer's circumstances can change. Income, employment, relationships, credit profile and lending policy can all shift and so can tax law. A contract signed in 2026 may well settle after 1 July 2027.

Step 5. Practical Completion and Pre-Settlement Inspection

When construction reaches practical completion, the developer notifies the buyer and the settlement clock starts. The buyer is usually entitled to a pre-settlement inspection to check the finishes against the contract and the schedule.

Defects found at the inspection are recorded. Most contracts require the developer to fix them before settlement or during a defects liability period after it.

Step 6. Settlement and Finance Approval

At settlement the buyer pays the balance of the price and takes title, usually funded by a home loan.

This is where off the plan carries a risk established buying does not. The lender orders a fresh valuation of the completed property, independent of the contract price agreed 18 to 36 months earlier. If the valuation comes in below the contract price, the lender lends against the lower figure and the buyer must cover the gap from their own funds. Our guide to off-the-plan finance approval walks through how valuation shortfalls happen.

Step 7. Defects Period

After settlement, most off-the-plan contracts include a defects liability period, during which the buyer can notify the developer of defects found after moving in. Beyond that period, statutory builder warranties continue to apply, on terms set by state law.

What an Off-the-Plan Contract Should Cover

The contract is the entire deal. Eight elements should be checked during the Step 2 review.

Price and deposit terms: the deposit amount, its form and where it is held.
Sunset date: the date by which the title must be registered and what each party can do if it passes.
Variation clause: what the developer can change and the threshold at which the buyer can object.
Finishes schedule: the specific brands, models and standards. Vague wording ("equivalent quality") favours the developer.
Layout and floor plate: tolerances on dimensions, orientation and position in the building.
Common property and inclusions: what is part of the unit, what is common property and what is excluded.
Settlement terms: how long after registration of the title settlement must happen.
Defects and warranties: the defects liability period, warranty terms and the path for repairs.

A conveyancer or property solicitor experienced in off-the-plan contracts will work through these in detail. This is not a step to compress.

Tax: What the 2027 Rules Mean for an Off-the-Plan Dwelling

This section describes the rules in general terms. How they apply to you depends on whether you will live in the property or rent it out, your income and how you hold it, so treat everything here as questions for your accountant. If the property will be your home, the main residence exemption can still apply. The Act does not amend those rules, although it relies on them when a gain is split between home and rental use.

Negative Gearing: Grandfathering Counts From the Contract Date

From the 2027-28 income year, net losses on residential dwellings held to rent out will no longer be deductible against other income. They will become a "quarantined amount" that can be used against income from grandfathered or new dwellings and against residential capital gains, with any remainder carried forward.

Dwellings last acquired before 7.30 pm, by legal time in the ACT, on 12 May 2026 are grandfathered. The Act says that where you buy under a contract, you are treated as owning the dwelling from the time you enter into the contract. The explanatory memorandum confirms the test is based on when the contract to purchase is entered into. An off-the-plan contract signed before that moment is grandfathered even if the building is finished and settled years later.

Negative Gearing: New Dwellings Are Exempt

New dwellings will be exempt from the limit. The definition of "new" is in the Tax Reform No. 3 Bill, introduced on 14 October 2026, which is not yet law. Under the Bill, as under Treasury's August draft, a dwelling bought from a previous owner is new for the buyer where they acquire it no more than 24 months after a certificate of occupancy was first issued for it. The explanatory memorandum states that this case "may apply where an entity buys an off-the-plan unit", because the buyer acquires the dwelling at settlement, which typically comes after the certificate of occupancy is issued. The Bill also excludes dwellings whose certificate of occupancy was first issued before 7.30 pm on 12 May 2026, with a transitional rule for some developer stock on hand.

Two points follow. First, the two tests use different dates: grandfathering looks at the contract date, while the draft new-dwelling test looks at settlement. Second, the new-dwelling definition is in a Bill that has not yet passed and may be amended before it does. Ask your accountant how your contract and settlement dates sit against both tests.

CGT When You Later Sell

For CGT events from 1 July 2027, the Act will replace the 50% discount with cost base indexation for resident individuals, trusts and partners, plus a 30% minimum tax for resident individuals. Owners of new residential dwellings (including through a trust or partnership) will be able to choose to keep the 50% discount instead of indexation and the minimum tax, and gains discounted under that rule will sit outside the minimum tax. Under the Tax Reform No. 3 Bill, whether a dwelling is new is tested from each owner's position when they acquire it, so an off-the-plan buyer who qualified at settlement would keep that status when they later sell.

Because the definition is not final, do not assume a particular project qualifies. If you sell, the ATO's CGT events page states that the CGT event happens on the date of the contract, not settlement.

Death and Relationship Breakdown

The Treasury Laws Amendment (Tax Reform No. 2) Act 2026 (Act No. 71 of 2026, assented to on 26 August 2026) preserves, from the 2027-28 income year, a dwelling's grandfathered or new-dwelling status when it passes to a surviving spouse or is transferred after a relationship breakdown. It does the same when a co-owner who is not a spouse dies, but only where both owners' interests already had that status.

Self-Managed Super Funds

The same Act separately limits new limited recourse borrowing by self-managed super funds over real property to business real property, from 10 August 2026. It does not apply where the asset is acquired under an arrangement entered into before that date, even if settlement happens later. If a fund is involved in any purchase, speak to a specialist SMSF adviser and accountant.

Foreign and Temporary Residents

Foreign and temporary residents will not get the new cost base indexation. They also face separate rules on what they can buy; see below.

Stamp Duty on Off-the-Plan Purchases

Several states offer stamp duty concessions or deferrals for off-the-plan purchases and the structures differ by state. Two examples:

NSW: Revenue NSW states that eligible owner-occupiers may be able to defer paying transfer duty for up to 12 months. Duty is then due at the earliest of 15 months after the contract, settlement or assignment. Foreign buyers, trusts and companies are excluded.
Victoria: the State Revenue Office's temporary off-the-plan concession covers apartments, units and townhouses in strata subdivisions with common property, on contracts entered into from 21 October 2024 and before 21 April 2027. It does not cover house-and-land packages outside such a subdivision.

Our stamp duty state by state guide covers the current rates and concessions. Model the duty position with your conveyancer before signing, because the difference can be material at apartment price points.

Key Risks Off-the-Plan Buyers Carry

Five risks sit on the buyer's side of the contract. They are structural, but they can be weighed at the contract review stage.

The valuation gap at settlement. Markets move during the contract gap. If the bank valuation comes in below the contract price, the buyer must cover the difference from their own funds or risk default.

The finance approval gap. A pre-approval at exchange is not binding at settlement. It expires and the buyer's income, expenses, credit profile or the lender's policy may have changed. A full approval is required at settlement.

The sunset clause. If construction runs late and the sunset date is reached, both parties have rights. Reformed state regimes limit a developer's ability to rescind without the buyer's consent in some states, but the position varies.

Variation. The completed unit may differ from the display version on finishes, layout or orientation within the contract's tolerances.

Circumstances and rules can change. The buyer is committed for 18 to 36 months to a property they cannot move into. Personal circumstances can shift and so can the tax settings that applied when they signed. Resale by assigning the contract is often restricted and the deposit is at risk if the buyer cannot complete.

Off-the-Plan and First Home Buyers

First home buyers can often use first home owner grants and duty concessions on off-the-plan purchases where the property meets the relevant new-home definition. Eligibility rules, value caps and timing differ by state and scheme. Our first home buyer schemes guide covers them.

Off-the-Plan and Foreign Buyers

Foreign buyers generally need Foreign Investment Review Board (FIRB) approval before buying residential property. The Government's stated policy is to channel foreign investment into new dwellings. From 1 April 2025 to 30 June 2029, foreign investors are generally prohibited from buying established dwellings. FIRB's fees guidance states that most proposals have a 30-day decision period, which starts when the correct fee is paid. Factor that into the contract timetable and allow for state foreign-buyer duty surcharges. Our FIRB rules guide sets out the current position, including the temporary ban on foreign purchases of established dwellings.

When Off-the-Plan Works Well and When It Does Not

Off the plan can suit buyers who want a brand-new property, who want time to save toward settlement, who can use the duty concessions available in some states or who are buying in a project they have researched closely from a developer with a strong delivery record.

It works less well for buyers who need certainty on the settlement date, buyers in markets where the valuation gap risk is material, buyers who need flexibility during the contract gap and buyers who want to inspect the finished property before committing. Our guide to off-the-plan versus established property compares the two processes side by side.

FAQ

Does an off-the-plan apartment count as a new dwelling for negative gearing?

It may, but this is not yet law. Under the Tax Reform No. 3 Bill, introduced on 14 October 2026, a dwelling is new for a buyer who acquires it no more than 24 months after its certificate of occupancy is first issued. The explanatory memorandum says this may apply to an off-the-plan unit, because the buyer acquires it at settlement, which typically comes after the certificate of occupancy is issued. The Bill may change before it passes, so check the final law and your own dates with your accountant.

I signed an off-the-plan contract before Budget night 2026. Is it grandfathered?

The Act treats a buyer under a contract as owning the dwelling from the contract date. A contract entered into before 7.30 pm ACT legal time on 12 May 2026 meets the grandfathering test even if settlement comes later. Confirm your position with your accountant.

How long is the contract gap on an off-the-plan apartment?

Commonly 18 to 36 months between exchange and settlement for an apartment project and longer if construction is delayed. Land subdivisions can have shorter gaps.

What happens if the bank valuation comes in below the contract price at settlement?

The lender lends against the lower valuation and the buyer funds the gap from their own resources. It is the most common settlement problem in off-the-plan purchases.

Does this guide say whether off the plan suits me?

This article does not give investment or tax advice. Whether a purchase suits you depends on your circumstances; speak to your own accountant and financial adviser.

About AgentBridge

AgentBridge gets your property in front of the people who represent serious buyers. One brief, matched to the right agents from 85+ across Australia. Developers releasing off-the-plan stock can engage AgentBridge to send a project at once to the buyers agents who match it, rather than relying on a single project marketing agency or listing agent. Buyers interested in off-the-plan stock often work with a buyers agent for independent representation through the contract review and settlement.

Sources

General information only, not financial, legal or taxation advice and not credit assistance. Speak to your own broker, accountant or solicitor before acting on anything here.

Previous editions: Buying Off the Plan in Australia. The Complete Process for 2026 (Before the 2026 tax reform)

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