Negative Gearing
Tax & Deductions
When the costs of owning an investment property exceed the rental income it generates.
Full Explanation
Negative gearing occurs when your rental income is less than your deductible expenses (loan interest, maintenance, depreciation, etc.). The resulting loss can be offset against your other taxable income, reducing your overall tax bill. It is one of the most widely used tax strategies for Australian property investors.
Example
Your property earns $25,000 in rent but costs $35,000 in interest and expenses, creating a $10,000 loss that reduces your taxable salary income.
Frequently Asked Questions
Is negative gearing legal in Australia?
Yes. Negative gearing is fully legal and has been a feature of the Australian tax system for decades. You report the loss in your tax return and it offsets other income.
Can I negatively gear more than one property?
Yes. There is no limit on the number of negatively geared properties you can hold. Losses from all properties are combined and offset against your other income.