Negative gearing
An Australian tax treatment that allows a net loss from a rental property — where deductible expenses exceed rental income — to be offset against the investor's other assessable income in the same year.
A rental property is “negatively geared” when its deductible expenses — interest, depreciation, repairs, rates, management fees, and insurance — exceed the rental income it produces. Under current Australian tax law, the net loss can be applied against other taxable income such as salary, reducing the investor’s overall tax bill for the year.
Negative gearing does not create a permanent tax saving; it shifts timing. Any capital gain on sale is assessed separately, typically with the capital gains tax discount for assets held more than 12 months. The strategy works only where the expected after-tax total return — rental income plus capital growth net of tax — is positive.
Unlike New Zealand’s rental loss ring-fencing regime, Australia does not quarantine residential rental losses at the individual level, which is a frequent source of confusion for investors who operate across both countries.
Primary source
Australian Taxation Office (ATO) — Negative and positive gearing →Last reviewed 15 April 2026. Rates, thresholds, and deadlines change — always verify against the primary source before making decisions.