Is Negative Gearing Right for Me?
Negative gearing is often talked about as if it’s something everyone should either do — or avoid.
In reality, it’s neither good nor bad on its own. Whether negative gearing is right for you depends on your income, cash flow, goals, and tolerance for risk.
If you’re wondering whether it makes sense for your situation, these are the right questions to ask.
Can I Comfortably Cover the Ongoing Costs?
The first and most important question is about cash flow.
Negative gearing means the property will cost you money to hold, at least initially. Even with tax deductions, you’ll need to cover the gap between rental income and expenses.
If that ongoing contribution feels manageable within your budget — without creating stress — negative gearing may be worth exploring. If it would stretch you too thin, it’s usually a sign to be cautious.
Is My Income Stable?
Negative gearing generally suits people with stable, predictable incomes.
That stability makes it easier to manage holding costs and ride out changes such as interest rate rises, maintenance expenses, or short-term vacancies.
If your income fluctuates or feels uncertain, it’s important to factor that into any decision.
Am I Investing for the Long Term?
Negative gearing is rarely about short-term gains.
Most people use it while aiming for long-term capital growth. The idea is that over time, the property increases in value and eventually becomes easier to hold as rent grows and loan balances change.
If you’re thinking short term, negative gearing may not align with your goals.
Do I Understand the Tax Benefit — and Its Limits?
One common misunderstanding is thinking negative gearing means getting the loss back at tax time.
In reality, tax deductions usually return only a portion of the loss. You still fund the rest.
Understanding this upfront helps avoid disappointment and ensures expectations are realistic.
Does It Suit My Tax Position?
Negative gearing can be more beneficial for people in higher tax brackets, as the deductible loss may offset income taxed at a higher rate.
For others, the tax benefit may be smaller.
This is where guidance from tax professionals such as
The Accountants
is important to understand how it applies to your personal situation.
Do I Have a Financial Buffer?
Property investing rarely goes exactly to plan.
Unexpected repairs, changes in interest rates, or periods without a tenant can increase costs.
Having a buffer helps ensure negative gearing remains a strategic choice rather than a financial strain.
Is My Loan Structure Set Up Correctly?
How your investment loan is structured can significantly influence whether negative gearing feels manageable.
Interest rates, repayment type, and offset usage all affect cash flow.
A well-structured loan can make a big difference to how comfortable the strategy feels over time.
Am I Making the Decision for the Right Reason?
Negative gearing works best when it’s part of a broader investment plan — not just a reaction to tax.
If the main motivation is “saving tax” without considering cash flow or long-term goals, it’s worth slowing down and reassessing.
Why There’s No One-Size-Fits-All Answer
Negative gearing isn’t something you either should or shouldn’t do.
It’s a tool that works well in some situations and poorly in others. The key is understanding how it fits into your life, not just how it looks on paper.
How Chase Helps You Decide
While negative gearing is a tax concept, the finance structure behind an investment plays a major role in whether it’s right for you.
Chase Douglas has extensive experience in mortgage lending and helps clients understand how loan structure, borrowing capacity, and cash flow affect investment strategies like negative gearing.
Chase focuses on clarity — helping you understand whether the numbers work for your situation before any decisions are made.
So — Is Negative Gearing Right for You?
If you’re asking the question, you’re already taking the right approach.
You don’t need to decide today. You just need to understand how it would work for you.
👉 Book a conversation with Chase Douglas to explore whether negative gearing fits your income, cash flow, and long-term plans.
The best investment decisions start with the right questions.
