Negative Gearing: The Do’s and Don’ts Every Investor Should Know
Negative gearing can be a useful investment strategy when it’s done for the right reasons and with the right structure in place.
However, many of the problems people experience with negative gearing come from avoidable mistakes — not the strategy itself.
Understanding the do’s and don’ts can help you decide whether negative gearing fits your situation and how to approach it safely.
The Do’s of Negative Gearing
Do Focus on Cash Flow First
Before thinking about tax benefits, make sure you can comfortably afford the ongoing costs of holding the property.
Negative gearing means contributing money from your own income. That contribution should feel manageable, even if interest rates rise or expenses increase.
Do Have a Financial Buffer
Unexpected repairs, vacancies, or interest rate changes are part of property investing.
A solid buffer — often several months of repayments and expenses — helps protect you from short-term shocks and keeps the strategy from becoming stressful.
Do Think Long Term
Negative gearing is usually most effective as part of a long-term investment plan.
The aim is typically capital growth over time, not short-term income. Make sure your time horizon aligns with the strategy.
Do Get the Loan Structure Right
Loan structure plays a major role in how manageable negative gearing is.
Interest rates, repayment type, and access to offset accounts all affect cash flow. A well-structured loan can reduce risk and improve flexibility.
Do Get Professional Advice
Negative gearing sits at the intersection of tax and finance.
Tax professionals such as
The Accountants
can help explain how negative gearing affects your tax position and whether deductions apply to your circumstances.
The Don’ts of Negative Gearing
Don’t Do It Just for the Tax Benefit
One of the most common mistakes is investing purely to reduce tax.
Tax deductions only offset part of the loss — they don’t eliminate it. If the investment only works because of the tax outcome, the risk is usually too high.
Don’t Underestimate Ongoing Costs
It’s easy to focus on best-case scenarios and underestimate real-world expenses.
Maintenance, vacancies, rate rises, and insurance costs all add up. Being conservative with assumptions helps avoid surprises.
Don’t Ignore Interest Rate Risk
Negative gearing is sensitive to interest rate movements.
If rates increase, holding costs rise quickly. Make sure your finances can handle higher repayments than today’s rates.
Don’t Stretch Your Borrowing Capacity
Just because you can borrow a certain amount doesn’t mean you should.
Stretching too far leaves little room for error and increases stress if circumstances change.
Don’t Treat It as Set and Forget
Negative gearing requires ongoing review.
As rents increase, loans change, and personal circumstances evolve, the strategy may need adjusting. Regular reviews help keep things on track.
Why Getting the Finance Right Matters
While negative gearing is often discussed as a tax strategy, the finance structure behind it plays a major role in success or failure.
Chase Douglas has extensive experience in mortgage lending and helps investors structure loans that support long-term goals while managing risk.
Chase focuses on affordability, flexibility, and clear communication — so investors understand their position before committing.
Should You Consider Negative Gearing?
Negative gearing can work well when the do’s are followed and the don’ts are avoided.
The key is making sure the strategy fits your income, cash flow, and long-term plans — not just the tax outcome.
👉 Book a conversation with Chase Douglas to understand how investment lending can be structured safely and whether negative gearing suits your situation.
Good investing is about informed decisions, not shortcuts.
