Negative gearing explained for property investors
Negative gearing explained for property investors
Negative gearing is one of the most commonly discussed — and misunderstood — concepts in Australian property investment.
In simple terms, negative gearing occurs when the costs of owning an investment property exceed the rental income it produces, and that net loss is used to reduce your taxable income.
This treatment is not unique to property. It reflects the broader principle in Australia’s tax system that income is taxed on a net basis — income less allowable expenses.
Why negative gearing is often misunderstood
Negative gearing is frequently discussed in the media and political debate, which can make it seem complex or controversial.
In practice, whether negative gearing is appropriate depends on:
- your income level,
- your cash flow position,
- the long‑term performance of the property, and
- how the strategy fits within your broader financial and tax position.
Negative gearing is not a strategy in isolation. It should always be assessed alongside capital growth expectations, risk, and long‑term objectives.
Property investment tax advice
Negative gearing is only one part of property investment tax planning.
If you already own an investment property — or are considering one — we provide practical tax advice covering rental income, deductions, depreciation and capital gains tax.
Property investment tax advice
“
Learn more: using property to build wealth
If you’d like a clear, practical explanation of how property tax works — including negative gearing, depreciation, capital gains tax and common mistakes — this is covered in detail in my book:
Using Property to Create Wealth in Australia
The book is written for everyday investors and explains:
- how negative gearing actually works in practice,
- when it may or may not be suitable,
- the role of depreciation in cash flow, and
- common tax traps property investors fall into.
You can find more information about the book here:
Learn more about Using Property to Create Wealth in Australia
Need advice specific to your situation?
Tax outcomes for property investors depend heavily on individual circumstances.
If you’re considering an investment property or already own one, professional advice can help ensure deductions are claimed correctly and the structure suits your goals.
“