Negative gearing
When an investment property's deductible costs exceed its rental income, creating a loss that may be deducted against other income.
- Loss = deductible expenses minus rent
- From 1 July 2027, limited to new builds for most residential purchases
- Properties held at 7:30pm AEST on 12 May 2026 are exempt
How it works
Interest, rates, insurance, management fees, repairs and depreciation are deducted from rental income. If the result is negative, the property is negatively geared.
The 2026 changes
Under laws passed in 2026, negative gearing deductions for residential property are limited to new builds from 1 July 2027. Properties held at 7:30pm AEST on 12 May 2026 are exempt. Your accountant can confirm how this applies to you.
A property earning $30,000 a year in rent with $38,000 of deductible costs makes a $8,000 loss. Whether that loss can be deducted against salary now depends on the property and when it was bought.
Illustrative only. Figures are examples, not a forecast or recommendation.
A tax loss is still a loss. Negative gearing should never be the main reason to buy. Get tax advice before relying on it.
Common questions
Is negative gearing being removed?
Not entirely. Under the 2026 laws it is limited to new builds from 1 July 2027, with existing holdings exempt.
Does negative gearing apply to commercial property?
The 2026 limit applies to residential property. Ask your accountant about commercial.
Related terms
Sources
General information only. It does not consider your objectives, financial situation or needs, and is not financial, credit, tax or legal advice. Rules change, so check current law and get advice from a licensed professional before acting.