Property Strategies
Negative Gearing
Negative gearing describes an investment that costs more to hold than it earns, with the shortfall potentially offset against your taxable income under current rules.
How it works
A property is negatively geared when its expenses, including loan interest, exceed the rental income it produces. Under current Australian tax rules, that loss can often be offset against other income, reducing the tax you pay. The strategy generally relies on capital growth eventually outweighing the holding costs.
The important caveats
Negative gearing means you are funding a loss each period, so you need income to support it. It only makes sense if the expected growth justifies the ongoing cost, and tax rules can change. It should never be the sole reason to buy.
Because it is a tax matter, personalised advice from a licensed accountant is essential.
Getting proper advice
We do not give tax or financial advice. We introduce you to independent, licensed accountants and brokers who can explain how negative gearing applies to your situation.
Related reading
- Property investment mistakes — gearing errors that catch investors out.
- Finance and lending introductions — brokers who can structure investment lending.
Frequently asked questions
Is negative gearing a good thing?
It is a strategy, not a goal in itself. It only makes sense if expected growth outweighs the ongoing loss, and it needs professional advice.
Do I need an accountant for negative gearing?
Yes. Tax treatment is personal and can change, so a licensed accountant should advise on your specific circumstances.