Negative gearing occurs when the costs of owning an investment property exceed the income it generates. In Australia, this net loss is tax-deductible against your other income — reducing your income tax bill. The key benefit: every $1 of loss reduces your taxable income by $1.
It depends on your tax bracket and capital growth expectations. High-income earners (37%–47% marginal rate) in areas with strong capital growth prospects may find it tax-efficient. Lower-income earners benefit less from the deduction.
Yes — negative gearing applies to any income-producing investment. If you borrow to buy shares and the loan interest exceeds dividends received, you can claim the difference against other income.
Negative gearing is a strategy; tax deductions are the mechanism. The net loss from your investment property becomes a tax deduction offset against your other assessable income.