I always thought that negative gearing related to the ability to claim deductions on the interest payed for a rental property. But from what I read here and in other places, it looks like negative gearing is claiming a deduction for the loss incurred.
So does that mean that if I rent out my property and actually make a profit above my interest etc payments, can I still claim a deduction on the interest I pay?
From what I read in the ATO documentation, it looks like I can claim a deduction on the interest. Or am I reading this all wrong?
You can claim a deduction on the interest if you like but you will pay tax on the income. It balances it out.
Negative gearing just relates to earning less from an investment than it costs you to hold on to. Usually a negatively geared investment will show the best return from capital growth which is not impacted by taxation until you sell the asset and pay capital gains tax.
Robert Bou-Hamdan
Mortgage Adviser
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