Negative gearing describes an investment property where the running costs exceed the rental income. Under Australian tax rules, the net loss may be offset against other taxable income in some circumstances, which is why the strategy attracts attention.
What negative gearing means
When interest, management, maintenance, insurance and other deductions add up to more than the rent received, the property is negatively geared. The tax treatment of the resulting loss depends on the Australian Taxation Office rules that apply to your situation.
Why investors use it
The rationale is usually cash-flow patience: accept a short-term loss while holding an asset expected to grow over the long term. That expectation should be tested against the specific market and suburb, not assumed.
The rules are not a strategy
Tax benefits should support an investment decision, not drive it. Interest rates, vacancy, maintenance and market conditions can all change, so model conservative scenarios and obtain independent tax and financial advice.