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What Is Negative Gearing vs Positive Gearing in Property?

June 23, 2026

Negative gearing and positive gearing are two of the most discussed concepts in Australian property investment — yet they are frequently misunderstood. Understanding the difference is essential before committing to any investment property strategy.

What Is Negative Gearing?

A property is negatively geared when the rental income it generates is less than the costs of holding it — including mortgage interest, council rates, insurance, repairs, property management fees, and depreciation. The loss can be offset against your other taxable income, reducing your tax bill.

What Is Positive Gearing?

A property is positively geared when the rental income exceeds the holding costs, producing a positive cash flow. The surplus income is added to your taxable income, but the property generates real cash without requiring top-up from your salary.

Negative Gearing vs Positive Gearing Comparison

Factor Negative Gearing Positive Gearing
Cash flow Costs you money each month Pays you money each month
Tax benefit Loss offsets other income Surplus adds to taxable income
Best suited to High-income earners in growth suburbs Investors seeking income and security
Risk Higher — depends on capital growth Lower — income covers costs
Typical suburbs Inner-city Melbourne, Sydney Regional, outer suburban

Which Is Better — Negative or Positive Gearing?

Neither is universally better. The right strategy depends on your income, tax position, investment timeline, and risk tolerance. High-income earners in the top tax bracket benefit most from negative gearing’s tax deductions. Investors approaching retirement or with variable income often prefer the security of positive cash flow.

How a Property Advisor Helps

Collings Property Advisory uses GeeVee AI to model cash flow scenarios for any property — including gross yield, net yield, estimated depreciation, and after-tax cash position — so you can make an informed decision before buying.

Frequently Asked Questions

Can the same property switch between negative and positive gearing?

Yes. As rents rise over time, a negatively geared property often becomes positively geared. This is the wealth-building cycle many experienced investors rely on.

Is negative gearing worth it in 2026?

With interest rates still elevated, many properties that were positively geared at 2% rates are now negatively geared. The answer depends on your specific loan, rent, and tax position. Book an advisory call and we will model it for you.

Why Collings?

Fixed fee: $4,500 + GST. Independent property and investment analysis — no commission, no conflict of interest.

Visit collings.com.au/portal to book a free advisory call.

Find your next property with Collings

Track suburbs, get matched to on-market and off-market listings, and manage your whole property search in one place. Access the Collings property portal.

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