How negative gearing works, explained

Hi Dadaw,

As housing prices continue to rise for renters and potential buyers in 2024, what does this mean for investors like you?

Mark Chapman from H&R Block explains that negative gearing allows you to offset rental property losses against your other income, which could reduce your tax bill.

Consider this: Bob from Melbourne used negative gearing when he purchased a property in 2016. While he initially made small annual losses on rent, when he sold the property five years later, he made a substantial after-tax profit of $180,550*.

The key? Rising property prices and capital gains tax discounts. However, this strategy works best in times of increasing house prices.

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*These numbers are provided for illustrative purposes only.