Negative gearing is one of the most talked-about — and least understood — concepts in Australian property. In plain terms, a property is negatively geared when its holding costs exceed the rent it earns, producing a loss that can offset your taxable income.
How it works
If your interest and expenses total more than your rental income, the shortfall reduces your assessable income at tax time. The strategy only makes sense when the expected capital growth outweighs the after-tax holding cost.
It is never a reason to buy on its own — a tax benefit on a poorly chosen property is still a poor investment. The property has to stack up on fundamentals first.
This is general information, not tax advice. Everyone’s situation is different, and we always recommend confirming the specifics with a qualified accountant as part of your plan.
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