Property Investors

Negative gearing occurs when you borrow to invest in a property for which the cost of borrowing and maintaining the property exceeds the income from the property. Negative gearing for an investment property, for instance, occurs when the annual interest payable on the loan used to acquire the property plus other expenses incurred in maintaining the property, exceeds the annual rental income
the property generates.

In certain situations the interest on an investment loan for an income producing purpose is fully deductible, even if the income falls short of the interest. Any shortfall ends up offsetting income from other sources, such as the wage and salary income of the investor as well as ongoing maintenance and small expenses are similarly fully deductible.

It is advisable to consult with your accountant on taxation issues before making any investment decision.