Negative Gearing Explained Simply
- ozhousehunters
- Feb 7
- 2 min read
Negative gearing is one of the most talked-about — and misunderstood — strategies in Australian property investing.
Let’s break it down in the simplest way possible.
✅ 1. What Is Negative Gearing?
Negative gearing happens when your investment property costs more to run than it earns in rent.
For example:
Your rent = $450 per week
Your expenses (loan, rates, insurance, maintenance etc) = $550 per week
That means you’re losing $100 per week — and that loss is called negatively geared.
✅ 2. Why Do Investors Use It?
Even though you’re losing money short-term, you may benefit in two ways:
Tax benefits: You can usually claim the loss against your income, which reduces your tax bill
Capital growth: Investors aim for the property’s value to increase over time, making a profit when they sell.
In simple terms:
➡️ Lose a little now, gain more later.
✅ 3. Is Negative Gearing Right for You?
Negative gearing suits people who:
Have stable income
Can afford short-term losses
Are investing for long-term growth, not immediate cash flow
However, it’s not for everyone — if property prices stagnate or interest rates rise, the strategy can become risky.
Final Thought
Negative gearing is a long-term investment strategy, not a get-rich-quick plan. It works best when paired with:
Strong growth locations
Smart property selection
A clear financial strategy
Always speak to a financial adviser or accountant before using this strategy.
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Published by:
Nick Karayanis B.Eng. UNSW (Civil)
Licensed Contractor NSW (Building)
Disclaimer:
The content of this blog is for informational and educational purposes only and should not be considered professional financial, legal, or real estate advice. Every real estate transaction and renovation project is unique, and you should consult with qualified professionals, such as real estate agents, contractors, and legal advisors, to address your specific needs and circumstances. The information provided here is based on personal experiences and research and may not reflect current market conditions or regulations in your area. Readers assume all responsibility for decisions made based on the content of this blog.
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