Invest
Fast facts about negative gearing
What is negative gearing?
Gearing is when investors borrow money to purchase an investment. When investors buy a loss-making investment, it’s called negative gearing.
Fast facts about negative gearing
What is negative gearing?
Gearing is when investors borrow money to purchase an investment. When investors buy a loss-making investment, it’s called negative gearing.
What is a negatively geared property investment?
Gearing may be used to buy any investment asset, but it is more commonly employed by property investors.
A negatively geared investment property means that the sum of expenses (including loan interest and principal payments) is higher than the rent income generated.
Investors need to use their own income to pay for the remainder of expenses.
Benefits of negative gearing
The Australian Taxation Office (ATO) allows negatively geared investors to offset the loss against their tax payable.
This tax offset and the hope that the asset will increase in value enough to recover losses when liquidated is what negative gearers are after.
Negative gearing and regulations
Because many property investors use the negative gearing strategy to minimise their tax payable, there have been several propositions to reform its regulations and impose tighter restrictions.
As at 1 July 2017, ATO enforced tighter restrictions on:
- Depreciation deductions claims for plant and equipment items in residential and rental real estate
- Offsets for travel expenses incurred for any transaction relating to the property
Despite this, the Australian Labor Party (ALP) proposed even tighter restrictions on negative gearing in the lead up to the 2019 elections.
Proposed changes to negative gearing
The government has kept an eye on negative gearers to ensure that the tax privileges they are given are not taken advantage of. In fact, the Opposition has been vocal about enforcing tighter restrictions should the party win elections.
ALP’s most recent attempt to tighten negative gearing rules were proposed in the run up to the May 2019 elections:
- Negative gearing strategy may only be applied to newly constructed properties
- Only negatively geared properties purchased before 1 January 2020 will be fully grandfathered
ALP’s election loss halted further restrictions on this strategy, but it may not be the last time restrictions will be proposed or enforced.
If you’re a rookie property investor who wants to use the negative gearing strategy, it’s highly recommended to seek the advice of a licensed professional before securing a property.
RELATED ARTICLES
About the author
About the author
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
