Negative Gearing Explained —
2026 Update

How negative gearing works

When your investment property expenses exceed your rental income, the difference is a tax-deductible loss. For example, if your property earns $25,000 in rent per year but your total deductible expenses (interest, rates, insurance, management, depreciation) are $35,000, you have a $10,000 negatively geared loss. This $10,000 is deducted from your taxable income, reducing the amount of tax you pay.

The tax benefit depends on your marginal tax rate. At the 37 per cent bracket, a $10,000 loss saves $3,700 in tax. At the 45 per cent bracket, the same loss saves $4,500. This is why negative gearing is more valuable to higher-income earners.

The 2026 policy position

As of early 2026, negative gearing remains available without restriction in Australia. However, there has been significant public discussion about potential changes. Search volume for negative gearing information has surged, driven by budget speculation and policy debate.

It is important to distinguish between confirmed policy and speculation. As of the date of this article, no changes to negative gearing have been legislated. Any investment decision should be based on the current rules, with an understanding that policy can change. Always seek independent tax advice before making investment decisions based on expected tax benefits.

Should negative gearing influence your investment decision?

Negative gearing is a tax benefit, not an investment strategy. A property that only makes financial sense because of the tax deduction may not be a sound investment. The fundamental drivers of property investment returns are rental yield and capital growth — the tax position is secondary.

That said, understanding how negative gearing interacts with your loan structure, depreciation schedule, and income is important for optimising your investment. Read our full guide to investment property loans for the broader picture.

Frequently asked questions