tax deductions for taking out a loan to purchase a rental property

Negative gearing is when an investor borrows money to aquire an investment property, and the income generated by the investment (ie: rental income) is less than the cost of owning the investment (ie: interest, rates, depreciation, repairs ect)


This means that the investor is making a loss (the property is “Negatively geared”), and for tax purposes this is deducted from the investor’s taxable income – providing tax benefits and making the investment more attractive in some cases.


Read more about the process of lodging an online tax return page and follow the steps to lodge your tax online now.

income producing investment property generated by the rental investment

Positive Gearing is when the income from an investment is higher than the cost of owning the investment. In this case, the investor will pay tax on the profits they make, and when the asset is sold Capital Gains Tax will also be applicable.


Negative Gearing can reduce the impact of events, by allowing you to offset losses against your income. So if there is an interest rate rise, or you are not receiving rent for example, this will mean you can deduct these losses from your assessable income, and your taxable income will be reduced.


use negative gearing losses to offset income from other sources


How To Calculate Negative Gearing Against The Income From A Rental Investment Property

Watch this video for an explanation on how negative gearing can reduce your tax and increase your wealth


It is worth taking the time to calculate which method will have most benefit to you, and will help you reach your individual goals.


CONTACT US to discuss whether negative gearing can work for you, and if we can help reduce your tax as a result. Many factors need to be considered and each person’s circumstances will be different.

renovating an investment house can be claimed as a tax deduction
Visit our How It Works page and follow the steps to lodge your tax online now.

This Audio File Explains How Negative Gearing Can Be Used To Increase Your Tax Return