This is one of the most debated questions in Australian property investing — and the right answer depends entirely on your income, tax bracket, cash flow needs, and investment timeline.
What Is Positive Gearing?
A positively geared property generates more rental income than its total holding costs (mortgage, rates, insurance, management). You receive net income each month. Example: $500k property, $450/week rent, $380/week in costs = $70/week positive cash flow.
What Is Negative Gearing?
A negatively geared property costs more to hold than it earns in rent. The shortfall is tax-deductible against your other income. Example: $1M property, $600/week rent, $850/week in costs = $250/week shortfall, but you claim the loss at your marginal tax rate.
The Real Numbers (2026 Interest Rates)
| Strategy | Monthly Cash Flow | Tax Benefit | Growth Potential | Best For |
|---|---|---|---|---|
| Positive gearing | +$200 to +$500 | Modest (income is taxable) | Medium (often regional or outer suburban) | Low-to-mid income, retirees, SMSF |
| Negative gearing | -$300 to -$1,000 | High (loss deductible at top marginal rate) | High (inner-city, premium suburbs) | High-income earners in top tax brackets |
Which Is Right for You?
If you earn above $120k: negative gearing in a high-growth suburb returns more total wealth in 10 years despite the monthly cash drain. If you earn below $80k: positive gearing preserves cash flow and avoids financial stress.
Ask GeeVee: Gearing Strategy Analysis
GeeVee models your income, tax bracket, target property, and 10-year projection to show you which strategy maximises your actual after-tax wealth.
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