Why this ASX property stock could be a surprise winner from Australia’s negative gearing changes

Australia’s federal budget delivered on 12 May 2026 contained one of the most significant changes to property investment policy in a generation.

From 1 July 2027, negative gearing will be abolished for established residential properties purchased after 7:30pm on 12 May 2026, with the only exception being newly built homes.

For most property investors, that is bad news.

For Mirvac Group (ASX: MGR), it could be one of the most important tailwinds the company has received in years.

What the budget actually changes

Negative gearing on investment properties purchased after 12 May 2026 will no longer be available from July 2027 onwards.

This means that investors buying existing homes can no longer offset rental losses against their other income.

New builds, however, remain fully exempt from this change.

Investors who buy a newly constructed property will still access both negative gearing and the existing 50% capital gains tax discount, giving them a clear and meaningful tax advantage over buyers of established properties.

Furthermore, build-to-rent developments and properties held in widely held trusts and superannuation funds also receive exemptions, a provision that directly benefits Mirvac’s LIV Mirvac build-to-rent platform.

In short, the government has tilted the tax playing field toward new construction and away from established property.

Mirvac is one of the clearest beneficiaries on the ASX.

Why Mirvac is uniquely positioned

Mirvac is an integrated developer, investor, and fund manager with operations spanning residential masterplanned communities, premium office, industrial logistics, retail town centres, and Australia’s largest build-to-rent platform.

The residential development business, which delivers new homes and apartments in high-demand urban corridors across Sydney, Melbourne, and Brisbane, stands to benefit directly from the structural shift in investor demand toward new builds.

In Q3 FY2026, Mirvac reported a 28% year-on-year lift in residential sales, well before the budget announcement landed.

That momentum should accelerate as investors increasingly seek the tax advantages that only new construction can deliver.

Mirvac’s build-to-rent platform provides an additional and increasingly powerful angle.

The $1.7 billion LIV Mirvac Build-to-Rent Fund, recently recapitalised with Australian Retirement Trust acquiring a significant stake, owns operational assets in Brisbane and Melbourne and is actively developing new sites in growth corridors.

As existing landlords sell established properties to exit the less tax-advantaged environment, rental supply from the private investor market may tighten.

This may push renters toward institutional build-to-rent operators like LIV Mirvac and supporting rental income growth across the portfolio.

The numbers behind the business

In the first half of FY2026, Mirvac posted a 5% lift in operating profit to $248 million, with operating earnings per security of 6.3 cents, up 5% on the prior half.

CEO Campbell Hanan described the result as a strong half-year performance, noting:

Positive momentum saw residential sales increase 38 per cent year-on-year, with settlements up 22 per cent and a recovery in gross margins. The significant restocking of our development pipeline is also in line with our focus on Living and Premium-grade Office, and, coupled with a number of key launches and completions in the coming 18 months, provides excellent future earnings visibility.

Management reaffirmed full-year FY2026 guidance of 12.8 to 13.0 cents operating earnings per security and a distribution of 9.5 cents per security, up 5.6% on the prior year.

The valuation case

Mirvac shares have declined approximately 25% over the past twelve months, trailing the ASX 200’s significantly, as higher interest rates weighed on REIT valuations across the sector.

That underperformance has created an interesting entry point.

Macquarie has named Mirvac as one of four ASX REITs it expects to surge higher in 2026, pointing to improving residential margins, the growing build-to-rent franchise, and the budget tailwinds as key catalysts for a re-rating.

Foolish takeaway

Mirvac shares may not double overnight.

The interest rate environment, while improving, remains a headwind for REIT valuations, and the translation of budget policy into on-the-ground sales momentum will take time.

However, for investors with a multi-year time horizon, the combination of a recovering residential business, Australia’s largest build-to-rent platform, and a policy shift toward new construction makes Mirvac one of the most interesting property stocks on the ASX today.

The post Why this ASX property stock could be a surprise winner from Australia’s negative gearing changes appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.