What is negative gearing?
Negative gearing is when the costs of owning an investment property are more than the income it generates, creating a tax loss.
Negative gearing is when your investment property costs more to hold than it earns in rent. The loss — including mortgage interest, repairs, depreciation, and other expenses — can be deducted against your other income, reducing your tax bill.
It's a popular tax strategy in Australia. The idea is that you cop a small loss each year but benefit from capital growth when you eventually sell the property.
Key facts
- •The net rental loss reduces your taxable income from salary and other sources
- •Deductible expenses include loan interest, council rates, insurance, repairs, and depreciation
- •Only works as a tax benefit if you're actually making a loss — not a guaranteed win
- •Capital gains tax applies when you sell, but you get a 50% CGT discount if you've held for 12+ months
Try the calculator
Negative Gearing CalculatorFrequently asked questions
Is negative gearing worth it?
It depends on capital growth. The tax saving alone isn't enough — you're still losing money each year. It only pays off if the property's value goes up enough to outweigh the annual losses.
Can I negatively gear shares?
Yes. Negative gearing isn't limited to property. If you borrow to invest in shares and the interest exceeds your dividend income, you can claim the loss against your other income.
General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.