Negative gearing means your investment property costs more to hold than it earns in rent. The resulting loss can be offset against your other income (like your salary), reducing your taxable income and therefore the tax you pay. It's one of the most widely used tax strategies by Australian property investors.

Deductible Expenses

Common deductions include mortgage interest (not principal), council and water rates, property management fees, insurance, repairs and maintenance, and depreciation (capital works and plant/equipment). Depreciation is a non-cash deduction that can significantly increase your tax benefit without costing you anything out of pocket.

The Real Cost

While negative gearing reduces your tax, it doesn't make a loss profitable — you're still spending more than you earn from the property. The strategy relies on capital growth over time to make the investment worthwhile. Use our CGT Calculator to estimate your tax when you eventually sell.