Some numbers around Negative Gearing

Negative gearing explained?

In simple terms when related to property, it’s a tax offset that closes the gap between how much an investment costs

an owner and how much money they are able to make from it.

According to the Australian Tax Office, an investment property is said to be negatively geared when the property expenses, such as a mortgage or interest, exceeds the income gained from the property, like rent from tenants. Basically, when you are taking a loss on your investment. In many cases, if the property is new then the impact is minimised as there are more non-cash deductions like depreciation.

Now, if you are in this situation it’s possible for you to claim these losses as a deduction on your salary or income. This means negatively geared investment property owners can pay less income tax than they would without owning the investment property. The subsidy ideally encourages people to buy investment properties and rent them out. This Government incentive is offered to reduce the strain on public housing, as the government will never have the resources to meet with the demand. Sometimes to support one part of the community you have to incentivise another. If private individuals didn’t invest we would have fewer rental properties and available and rental prices would skyrocket.

But if the whole point of an investment – property or otherwise – is to make money, why would anyone commit to a negatively geared asset? The main reason is that Investors hope the income of the property will increase in the future as the debt is paid down and that when it comes time to sell, the profit from the sale will more than likely cover the lost money. When the rent from a property grows to cover the cost of the investment, it is then considered positively geared and owners are expected to pay tax on the income.

Here are some numbers you can quote around negative gearing when next at a BBQ with a so called expert.

What are the numbers?


9M total properties in Australia
7.2M occupied by owners
1.2M are investment properties which is 20%


29% 55-64 years
34% 45 -54 years
22% 35-44 years
15% under 34 years


18% less than $250K
35% $250K-$500K
18% $500K-$750K
29% over $750K


73% one property
17% two properties
6% three properties
4% four or more

Want to be the first to hear it first?

Enter your email to receive timely news and advice and start to secure your financial future today!

More Articles.

The Coming Retirement Crisis

Founder and CEO of Real Vision, Raoul Pal on behalf of Global Macro Investor, his research business (Raoul Pal – The Coming Retirement Crisis – YouTube) Retirement is all some

Read More

Help Us By Helping YOU!

At Colonial Pacific, we provide solutions to educate you in taking control of your financial future. Learn more about how you can take the plunge today!

Scroll to Top

Find and buy in the best (hush-hush) growth suburbs.

Discover the hidden-gem neighbourhoods primed for capital growth and how to buy now, in today’s ultimate investor conditions (before the market changes).
This field is for validation purposes and should be left unchanged.