Negative gearing is back in the headlines — but what does it actually mean, and how could it impact your investment strategy? Here’s a simple breakdown of how negative gearing, investment loans, and smart tax strategies may benefit Australian property investors.
More than 2.26 million Australians own an investment property — and for good reason:
💰 Rental income provides consistent cashflow to help service an investment loan
📈 Property values have grown 10.9% per year on average over the last century (AMP insights)
🏠 Many investors benefit from a 50% capital gains tax (CGT) discount when selling
⚖️ And most importantly — the tax advantages of negative gearing
Negative gearing occurs when the costs of holding an investment property (loan interest, strata, insurance, etc.) are higher than the rental income received.
This results in:
❌ A taxable loss
🔁 A deduction that can be offset against your salary or other income
💸 A lower overall tax bill
This tax benefit makes negative gearing a popular strategy for many investors using investment loan.
Let’s break it down using a simple example.
Deb earns $125,000 per year.
She buys an investment property that earns $25,000 rent but costs $35,000 per year to hold.
📉 Loss: $10,000
🧾 Taxable income drops from $125,000 → $115,000
💵 Annual tax saving: $3,000
Those savings can help reduce her investment loan repayments or support strategies like debt recycling.
Recent comments from the Federal Treasurer about reviewing negative gearing modelling sparked public debate. While the Prime Minister stated there are “no plans to change negative gearing”, the topic remains politically sensitive:
👥 Over 2.2 million investors hold investment properties
🔄 Roughly half of them use negative gearing
🗳️ Any policy change could influence millions of voters
For now, negative gearing remains a core investment strategy for many Australians.
Before making a move, it’s important to understand whether refinance options, or debt recycling strategies are suitable for your situation.
We can help you:
📊 Assess your borrowing capacity
🏦 Explore refinance options to unlock equity
💼 Understand how an investment loan could fit your long-term goals
📈 Plan smart finance structures to support wealth creation
If you’re ready to explore your next investment opportunity, reach out to us today.
This article provides general information only and does not constitute personal financial or tax advice. Your individual circumstances may differ. Seek advice from a qualified tax professional before making decisions.
