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What is negative gearing

At its core, negative gearing is a tax deduction available to property investors when their rental income falls short of their loan interest and property expenses.

This difference between income and expenses (the "negative” part of gearing) can be deducted from the investor’s taxable income, which can provide financial relief, particularly in the early years of property ownership.

This practice incentivises investors to purchase and maintain rental properties, as it can soften the cash flow burden until the property appreciates or rental income grows to cover costs.

Negative gearing is not an exclusive benefit for property investors; it’s a foundational tax principle applied across many asset classes in Australia, including shares, bonds, and business investments.

Singling out property investors for using negative gearing ignores the widespread application of this principle across different types of investments.

Targeting property investment alone ignores the broader purpose of negative gearing as an investment incentive across the board.

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Jason Gwerder
Thursday, 30 January 2025


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