Negative Gearing Explained

This longer explainer builds on the core Negative Gearing definition with a practical example: an investor with a $600,000 loan at typical interest rates and rental income that falls short of total holding costs by $8,000 a year can generally deduct that $8,000 loss against their salary income, reducing their taxable income accordingly. This strategy trades short-term cash flow for a tax deduction and the expectation of long-term capital growth, and is most commonly used by investors in higher income tax brackets.