Negative gearing is changing. But not for margin lending.

15 September 2026 |Gearing 101

Negative gearing is changing. But not for margin lending.

15 September 2026 |Gearing 101

How has the 2026-27 Federal Budget impacted margin lending?

Margin lending has long been a tax-effective investment strategy for many investors.

With the 2026 Federal Budget changing the tax implications of investment properties, margin lending could now become a more attractive investment option because the tax reforms do not impact financial assets such as margin loans.

Margin lending vs borrowing for property investing

For many years, property investment has been a way to grow wealth harnessing the tax concessions of negative gearing and the capital gains tax (CGT) discount. However, the 2026 Federal Budget, handed down on 12 May 2026, has changed the landscape.

With reforms to property taxation, the traditional strategy of negatively gearing established residential housing is potentially less enticing to some investors.

As a result, investors may look to include margin lending for shares, exchange traded funds (ETFs) and managed funds as part of their investment strategies.

What is gearing? And what is negative gearing?

Gearing simply means borrowing money to invest. You can borrow to invest in a range of financial assets like shares, managed funds or Exchange Traded Funds (ETFs). Gearing can also be used for property investment.

When the costs incurred in holding the investment are more than the income produced by the investment, the difference may be tax deductible^*. This is known as negative gearing and has historically been a tax-effective way to access funds to invest into growth assets, like property or shares.

Margin lending can be a tax-effective^* investment strategy

As the tax benefits of buying established property potentially diminish, for some investors margin lending could be an attractive alternative.

The government’s reforms on negative gearing (beginning 1 July 2027) impact existing residential investment properties purchased after 12 May 2026, but they do not impact financial assets such as margin loans.

Depending on their circumstances, investors who use a margin loan to buy shares, interests in managed funds or ETFs can still deduct their borrowing costs against their salary or wage income.^*

Both investment strategies – margin lending and property investing – have various risks and benefits. These are outlined in the summary below, together with potential costs associated with both.

Benefits and risks of margin lending and property investing

	Margin Loan (Shares/Funds)	Investment Property
Tax advantages	Interest may be tax deductible with ability to negative gear.^* (Interest can also be prepaid to bring the deduction into the current financial year).	With the government changes, tax-deductible expenses and the ability to negatively gear are only available on new builds, or established residential property purchased before 12 May 2026.^*Established properties purchased between 12 May 2026 and 30 June 2027 can be negatively geared until the new changes begin on 1 July 2027.
Income received	Dividends, distributions, and possible franking credits (depending on company policy).	Rental income from tenants.
Liquidity	Australian shares can be easily sold in part or fully liquidated to cash in three business days.	Liquidation can take weeks or months, and you cannot part sell.
Barriers to Entry	Requires small minimum investment amounts and low transaction costs.	Requires a substantial deposit and involves high upfront costs like stamp duty, conveyancing, and lender fees.
Volatility	Share markets fluctuate daily and can be affected by global events.	Real estate values tend to be less volatile day-to-day compared to equity markets.
Diversification	You can easily diversify into different asset classes, industries and markets.	More difficult to diversify due to higher barriers to entry.
Ongoing Cost	Interest and costs to manage investments.	Rates, insurance, management, property maintenance, strata fees, interest.
Margin Calls	If your portfolio value falls or lending ratios change, you may be required to restore the loan to an acceptable lending level. Selling assets to meet this call may result in unplanned gains or losses.	Not Applicable

Other Risks	Investment values may fall and your investment may not perform as expected.	Property values may fall.
	Borrowing to invest magnifies losses as well as gains.	Vacancy and tenant risk including damage and non-payment of rent.
	Margin calls may occur if portfolio values decline and require additional funds at short notice.	Unexpected maintenance and or repair costs.
	Interest rate increases will increase borrowing costs where a variable rate of interest applies.	Concentration risk in a single asset or location.
		Interest rate increases can reduce overall returns.

Please note that this is not an exhaustive list.

When considering the most appropriate strategy, you’ll need to take into account your own circumstances, financial goals and risk profile.

If you have an existing portfolio but haven’t implemented gearing, or you’re an adviser or investor interested in gearing, please complete our contact us form and we’ll be in touch. Alternatively, call us today on 1300 307 807.

If you’re a financial adviser and want to learn more about recommending gearing to your clients, please feel free to contact one of our Business Development Managers.

^* We recommend you obtain your own independent professional and tax advice on the risk and suitability of these types of investments and to determine whether your interest costs or other related expenses will in fact be fully deductible in your particular circumstance.

Things you should know

Gearing involves risk. It can magnify your returns; however, it may also magnify your losses.

Issued by Leveraged Equities Limited (ABN 26 051 629 282 AFSL 360118) as Lender and as a subsidiary of Bendigo and Adelaide Bank Limited (ABN 11 068 049 178 AFSL 237879). Information is general advice only and does not take into account your personal objectives, financial situation or needs. The views of the author may not represent the views of the broader Bendigo and Adelaide Bank Group of companies (“the Group”). This information must not be relied upon as a substitute for financial planning, legal, tax or other professional advice. You should consider whether or not the product is appropriate for you, seek professional financial advice and read the Product Disclosure Statement and Incorporated Statements (together, the ‘PDS’) and Product Guide, together with the terms and conditions applying to the product or service, available at www.leveraged.com.au, before making an investment decision. Not available to self-managed superannuation funds.

The information provided in this document may be subject to change. It is given in good faith and has been derived from sources believed to be accurate. Accordingly no representation or warranty, express or implied is made as to the fairness, accuracy, completeness or correction of the information and opinions contained in this article. To the maximum extent permitted by law, no entity in the Group, its agents or officers shall be liable for any loss or damage arising from the reliance upon, or use of the information contained in this article.