Selling an Investment Property in 2026

For most of the last thirty years, owning an investment property in Sydney was forgiving. Capital growth covered mistakes. Rates were lower. Credit was easier. Negative gearing was familiar and stable. Stock in the Eastern Suburbs was tight, and when an owner decided to sell, there was usually another buyer waiting.

That is not the market of 2026.

An owner considering a sale today faces several things arriving at once: reformed negative gearing and capital gains tax, rewritten NSW tenancy law, a cash rate at 4.35%, a new lending cap sitting over the top of the old one, falling values, more competing stock, and — in older strata buildings — capital works plans that are now considerably harder to hide.

Individually, each of these is manageable. The difficulty is that they meet at the same time. And they meet hardest on the owner who needs to sell rather than the owner who merely wants to.

The tax rules are now law, not proposal

This is the part where I most often hear confident misinformation, so it is worth being precise.

On 12 May 2026, as part of the 2026–27 Budget, the Government announced reforms to negative gearing and capital gains tax. The first tranche — the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 — received Royal Assent on 26 June 2026. It is law.

A second tranche is still being drafted. Treasury released exposure drafts of the Tax Reform No. 3 Bill on 4 August 2026, covering the more complex mechanics, with consultation closing on 21 August 2026. The architecture is settled. Some of the plumbing is not.

From 1 July 2027, negative gearing is generally limited to new residential dwellings. Properties held at 7:30pm AEST on 12 May 2026 are grandfathered, including properties under contract at that moment but not yet settled. Owners of those properties continue to deduct eligible rental losses against other income for as long as they hold them.

For established dwellings acquired after that moment, net rental losses are quarantined from 1 July 2027. They can be offset against residential rental income or future residential capital gains, or carried forward — but not deducted against salary.

Grandfathering protects the owner. It does not protect the asset.

That distinction will shape the investor buyer pool for established apartments for years. It is not a reason to panic. It is a reason to think carefully about who your buyer is, and what an established apartment is worth to that buyer once the deduction is gone.

Capital gains tax: the timing of the gain matters more than the timing of the purchase

The CGT reforms work differently from the negative gearing grandfathering, and conflating the two is the most common error I encounter.

From 1 July 2027 the 50% CGT discount is replaced, for individuals, trusts and partnerships, with a cost base indexation system together with a minimum 30% tax rate on real capital gains. Eligible new residential builds and affordable housing have additional choices.

For existing owners the reforms are prospective. Broadly: gains accrued before 1 July 2027 retain access to the existing discount arrangements; gains accruing from 1 July 2027 fall under the new rules.

The mechanism is a deemed disposal at 1 July 2027. To establish where the old gain stops and the new one starts, the owner elects between the market value of the asset immediately before that date — the default — or an apportioning method to be set by legislative instrument. The election is made by the time the return is lodged for the year of the actual sale.

So an owner should not think: “I bought before the changes, therefore CGT doesn’t affect me.”

There is a second trap in the 30% minimum. It bites hardest on taxpayers whose marginal rate sits below 30% — retirees, people in a low-income year, some trust beneficiaries. Which is to say it bites hardest on precisely the people who have always been advised that a low-income year is the right year to realise a gain.

I am not an accountant and this is not tax advice. My point is narrower, and it is a point about sequence: tax advice belongs at the start of a selling strategy, not after a buyer has signed a contract.

The question is no longer only what can I sell for. It is: what will I actually keep, after selling costs, debt and tax?

Selling a tenanted property is now a timetable problem

The NSW reforms that commenced on 19 May 2025 removed “no grounds” termination. A landlord now needs a recognised ground, supporting documents and the correct notice period. These rules apply to tenancies that began before the changes as well.

There are two separate sale grounds, and they are not interchangeable.

Proposed sale — the property is genuinely being offered for sale and the eventual contract requires vacant possession. Notice: 60 days for a fixed term of six months or less; 90 days for a longer fixed term; 90 days for a periodic agreement. Accompanied by either the proposed contract for sale or the agency agreement.

Actual sale — contracts have exchanged and the contract requires vacant possession. Notice: 30 days, supported by the contract or a written statement from the solicitor or conveyancer.

Now the part that catches people. Neither sale ground allows a landlord to end a fixed-term agreement early. The termination date cannot fall before the end of the fixed term. If there is a lease running to April, vacant possession before April requires the tenant’s agreement — and nothing else will produce it.

And the cost of getting it wrong

If an owner ends a tenancy on the proposed-sale ground and then does not sell, the property cannot be re-let for six months from the termination date. Re-letting inside that window is an offence. Fair Trading can approve an earlier re-letting, but only where circumstances have changed beyond the landlord’s control.

Read that again with a calculator in hand. An owner who empties an apartment for a campaign that fails is not simply back where he started. He is holding a vacant property, carrying the mortgage, earning nothing, for up to six months.

That is not a marketing decision. It is a financial one, and it belongs before the notice is served — not after the campaign stalls.

There are penalties, too, for terminating on a ground that is not genuine or supporting it with misleading documents. The NSW Rental Taskforce is actively focused on lawful terminations. This is not an area to improvise in.

Even inspections need planning

Selling with a tenant in place is entirely workable, but it has to be managed. NSW requires 14 days’ written notice before the first inspection for prospective purchasers. After that, unless the tenant agrees otherwise, they are not obliged to accept more than two inspections per week, each on 48 hours’ notice.

Two inspections a week is a campaign constraint. It is not fatal, but it means the campaign has to be designed around it rather than colliding with it in week two. A cooperative tenant is a genuine asset to a sale. An unhappy one, badly handled, will cost you more than the rent.

The buyer you had three years ago is not the buyer you have today

The Reserve Bank left the cash rate at 4.35% on 11 August 2026 — a second consecutive hold, following three increases in February, March and May.

Sitting over that, APRA continues to require lenders to assess borrowers with a 3 percentage point serviceability buffer above the loan rate.

And since February 2026 there is a second constraint. APRA now limits authorised deposit-taking institutions so that no more than 20% of new lending can be written at debt-to-income ratios of six times or above — measured separately for owner-occupier and investor portfolios, assessed quarterly. APRA has said the limit is not currently binding across the system. It is nonetheless a real constraint on the highly leveraged borrower, and investors sit disproportionately in that group.

The practical consequence is blunt. A buyer can love your apartment and still be unable to borrow what they could have borrowed in 2021. Price is not set by desire. It is set by capacity to pay.

Three separate policy levers now point buyers towards new stock

This is the part of the current market I think is least understood, and it deserves more attention than it is getting. Look at what a buyer choosing between an established apartment and a new one now faces.

Three separate instruments — two arms of tax policy and one prudential regulator — now tilt the same way.

None of this was designed to disadvantage the owner of a twenty-year-old apartment in Bondi Junction. It is aimed at supply. But policy intent and market effect are different things, and the market effect is that an established apartment now competes against new stock carrying structural tax and credit advantages it cannot match.

That does not make established apartments unsellable. Location, outlook, floor plan, land value, building quality and scarcity all still count, and in this part of Sydney they count for a great deal. It does mean an established apartment has to work harder to demonstrate its value — and that the seller should understand exactly what the alternative on offer to their buyer looks like.

Sydney values are already responding

This is not theoretical. Cotality recorded Sydney dwelling values falling 1.4% in July 2026, leading a national decline of 0.7% — the steepest single-month national fall since December 2022. Over the July quarter, Sydney fell 3.7%. PropTrack, using a different methodology, measured Sydney down 0.6% for the month, with the city more than 3% below its peak. The two indices differ in magnitude. They agree on direction.

One figure matters more than the headline for anyone reading this in the Eastern Suburbs.

Cotality also reported total capital city listings running 5.7% above the five-year average, alongside a continuing gap between what vendors expect and what buyers will pay. That gap is the most dangerous condition a seller can campaign into.

The first three weeks are when a property is newest and buyer attention is strongest. If the campaign opens on an expectation drawn from last year’s market, the property spends those weeks chasing the market downwards — and never catches it.

Days on market matter. Buyers notice how long a listing has been running. They notice revised price guides. They notice a passed-in auction. And then they ask the question no seller wants asked: “What’s wrong with it?”

More apartments are coming to Bondi Junction

Sydney has a long-term supply shortage. That does not protect any individual apartment owner from local competition. Property markets are local, and Bondi Junction is about to become considerably more local.

Waverley Council adopted its Bondi Junction Master Plan at its July 2026 meeting, identifying capacity for approximately 3,000 additional dwellings, ten per cent of them designated affordable housing.

The plan was adopted narrowly and drew substantial community opposition, principally on bulk, scale and overshadowing. A rezoning process follows — a planning proposal, traffic and wind studies, three-dimensional modelling, infrastructure funding. None of this stock arrives next year.

But buyers do not only price what exists. They price what is coming. A purchaser weighing a fifteen- or thirty-year-old apartment is increasingly weighing it against new stock offering modern finishes, new lifts, air-conditioning, energy efficiency, building amenity — and, as above, a materially better tax and credit position.

The financial condition of the building is now more visible

An apartment is not only the space inside the front door. A buyer is also buying into the balance sheet of the owners corporation.

Older buildings eventually need capital expenditure — waterproofing, concrete remediation, roofing, lifts, fire compliance, windows, façades. Every strata scheme in NSW must maintain a ten-year capital works fund plan. Where the fund is insufficient, the shortfall is raised by special levy.

And the records are now clearer

This is what changed on 1 April 2026, under the Strata Schemes Legislation Amendment Act 2025.

Capital works fund plans must now be itemised at asset level. A single line reading “general repairs” covering pumps, membranes, fire systems and cladding no longer suffices. Plans are lodged in Strata Hub. Section 184 strata information certificates carry expanded disclosure, including any orders or compliance action taken by NSW Fair Trading against the owners corporation, and any exclusive supply arrangements for utilities.

Buyers and their solicitors now see a sharper picture than they did three years ago. Which produces a simple and uncomfortable consequence.

The seller who has not read their own strata records will find out what is in them at the same moment the buyer does — except the buyer will be holding a pen.

Auction is a method, not a strategy

I have never accepted that every property should automatically go to auction.

In a rising market, with several emotionally committed buyers competing, an auction is extremely effective. It also works well for genuinely scarce property — an irreplaceable outlook, a beachfront position, a significant landholding, a residence with no real comparison.

An ordinary apartment in a market where buyers have choice is a different proposition. If there are four comparable two-bedroom apartments available, buyers do not have to fight for yours. They can cross the road.

In these conditions my preference is generally to sell with a price. A considered asking price gives buyers a point of engagement and allows me to negotiate individually with each of them, in private, on terms as well as price.

An auction without genuine competition publicly demonstrates the one thing you never want demonstrated: that nobody was prepared to bid. Passing in and reverting to private treaty does not restore the urgency that existed before auction day. It confirms its absence.

Be careful of promises built on last year’s market

The most expensive mistake a seller can make right now is choosing an agent because that agent quoted the highest number. An appraisal does not buy your property. A buyer does.

There is a real difference between an agency whose model depends on volume and an agent whose concern is the outcome of one client. A volume business needs listings. It needs turnover. It needs auctions. It needs transactions.

But sometimes the correct advice to an owner is: don’t sell yet. Or wait until the fixed term ends. Or resolve the strata position first. Or speak to your accountant about timing before we do anything. Or even — the price you have in mind is unlikely in this market, so let’s look at your alternatives before you commit to a campaign.

None of that wins a listing this month. It is quite often what the client needs to hear.

Before you sell, understand the whole position

• Tax What is the likely CGT position, and does the 1 July 2027 date change your timing?
• Tenancy Can the property lawfully be delivered vacant when the contract requires it? What does the six-month re-letting exclusion cost you if the campaign fails?
• Finance What is the debt position, and how urgently is the sale actually required?
• Strata What do the capital works plan and the section 184 certificate actually say?
• Competition What established and new stock can your buyer choose instead?
• Price What are buyers paying now — not in January?
• Method Is auction genuinely suited to this property, or is a priced campaign the better instrument?
• Time What happens financially if this takes three months longer than expected?

The decision to sell should follow those questions. Not precede them.

One agent. One client. One objective.

Markets change. Tax law changes. Tenancy legislation changes. Lending rules change. What should not change is the agent’s obligation to put the client first.

At Weiss Real Estate the role of the agent is not to make the largest promise at the listing presentation, or to process the greatest number of transactions in a calendar year. It is to understand why the owner is selling, what they need to achieve, and what stands between them and that outcome.

Sometimes that means auction. Sometimes it means selling with a price. Sometimes it means changing the timing. And sometimes the right advice is not to sell at all.

The right method is the one that serves the seller — not the agent’s business model.