what is negative gearing in australia

Negative gearing in Australia refers to a situation where the costs of owning an investment property—such as mortgage interest, maintenance, and other expenses—exceed the rental income it generates, resulting in a net loss for the investor. This loss can be offset against other types of income (like salary or business income) to reduce the investor's taxable income, thus lowering their overall tax bill. Investors typically use negative gearing to benefit from tax deductions in the short term while expecting capital gains on the property when it is sold in the long term. It is a common and controversial practice in Australia because it affects personal income tax revenue and property market dynamics, with wealthier Australians often benefiting more from it than lower-income groups.