How does negative gearing work in accounting?
submitted by Rachel

Dylan

Negative gearing is when your property expenses are higher than the rental income you earn.

The idea is that you're "gearing" or leveraging your investment, even if it's not making a profit right away. You can offset those losses against your other income to lower your tax bill. It's pretty common in real estate investing.

Robby Hart

Negative gearing is borrowing to invest in assets like property or shares, but the annual expenses exceed the income it generates.

The net loss can be deducted from your other income. That helps reduce your taxable income. Essentially, it's a strategy to offset your current losses with future capital gains. The asset has to appreciate to make it work though.