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Own an investment property? Planning to buy an investment property? Not sure how negative gearing works and how it can benefit you? Then you must read this. Negative gearing means that the interest you are paying on the investment loan is more than the income. As a result you are making a loss. The Positives of Negative Gearing So, if negative gearing means that you’re making a loss, how can that be positive? Nobody wants to get into property investment to lose money. Even though most properties you buy will be negatively geared i.e. rental income is less than the interest repayments, the real benefit comes from the capital growth i.e. increased value of the property. Negative gearing can work if the money you make from the capital growth is greater than the loss you make in rental shortfall. And with negative gearing, you will still reap the benefits of tax reduction by offsetting negative gearing amount against your other income. Example John pays $20,000 i...