Macquarie Strips Negative Gearing Add-Backs: What Property Investors Need to Know

Macquarie Bank has overhauled its investor credit assessment rules, removing negative gearing income add-backs from its serviceability calculations. This policy change means investors who previously used negative gearing losses to boost their borrowing capacity will find their assessed income meaningfully reduced at Macquarie — and potentially at other major banks that follow suit.

What Are Negative Gearing Add-Backs?

When a property is negatively geared, the annual rental income is less than the cost of holding it — including mortgage interest, maintenance, and property management fees. Under the previous policy, Macquarie would "add back" a portion of these losses to the borrower's assessed income, improving their debt serviceability ratio.

Under the new rules, these add-backs are eliminated. For an investor with $20,000 in annual negative gearing losses, this could reduce assessed borrowing capacity by $60,000–$100,000 or more at standard income multiples.

Why Is Macquarie Making This Change?

The move follows the Federal Government's 2026-27 Budget proposals to reform negative gearing and capital gains tax concessions. Even before those reforms pass Parliament, lenders are proactively tightening credit policy around investment properties — particularly as APRA continues to monitor investor lending growth.

According to The Adviser, "the major banks are weighing their options" as the credit landscape for property investors becomes more complex.

What Does This Mean for Property Investors?

If you currently hold investment properties with negative gearing exposure, or are planning to acquire one:

• Your assessed borrowing capacity at major banks may now be lower than previously calculated
• Pre-approval figures from 6+ months ago may no longer be accurate
• Refinancing at your current major bank may become more difficult if your serviceability no longer meets revised thresholds

Non-Bank Lenders: A More Flexible Alternative

Non-bank lenders operate outside APRA's direct prudential oversight and typically apply more nuanced income assessment frameworks. Rather than blanket exclusions of negative gearing add-backs, non-bank lenders can assess each investor's income position holistically — considering:

• Rental income on a gross basis
• Portfolio cash flow across multiple properties
• Business income for self-employed investors
• Alt Doc and full doc pathways depending on documentation available

If you have been impacted by Macquarie's changes, or are finding major bank credit policies increasingly restrictive, a non-bank lender assessment may reveal significantly more borrowing capacity than a traditional bank can offer.

MPFG Capital specialises in investor lending for those with complex income profiles. Our team can assess your situation and identify the right lending solution — whether that's an alt doc product for self-employed investors or a standard residential investment loan with a lender whose credit policy fits your circumstances.

Key Takeaways

• Macquarie has removed negative gearing add-backs from investor serviceability assessments
• This reduces assessed borrowing capacity for negatively geared property investors
• Other major banks may follow with similar policy tightening
• Non-bank lenders offer more flexible income assessment frameworks as an alternative

This article is general information only and does not constitute financial or credit advice. Always seek independent advice for your specific situation.