Positive or negative gearing describes one thing: whether the rent covers the loan interest and the running costs. If it does not, the property is negatively geared and the loss is a tax deduction. If it does, it is positively geared and the profit is taxed. Cash flow positive is different again, and the difference is worth knowing.
Three positions
| Position | What it means | Who pays the gap |
|---|---|---|
| Negatively geared | Rent is less than interest and costs | You, partly offset by tax |
| Cash flow positive | After tax and depreciation, you pay nothing | No one: the property carries itself |
| Positively geared | Rent is more than interest and costs | No gap; the surplus is taxed |
A new home can be negatively geared on paper and still cash flow positive in your pocket. Depreciation is a deduction you claim without spending the cash that year, so the tax saved can cover the shortfall.
Why holding cost weighs more from 2027
From the 2027-28 income year, losses on established homes bought after 7:30pm AEST on 12 May 2026 can only be set against later residential rental income, or the gain on sale, not wages. New builds keep negative gearing for their first owner. For an established home bought now, the tax refund that once softened the weekly cost is gone from the 2027-28 income year. Cash flow carries more of the weight in whether you can hold. The growth in the land is still, as I see it, the main reason to hold at all.
Properties that carry themselves
Dual-income homes and duplexes earn two rents from one piece of land, and they are where I see cash flow positive most often. I compared three real homes in a Tweed Heads comparison.
Home A rents for $560 a week and costs its owner $90 a week after tax. Home B rents for $720 a week and costs nothing. The owner of A needs $4,680 a year from wages; the owner of B does not.
Over ten years, the owner of B has $46,800 more in cash. If Home A sits on more land and grows faster, its owner may hold more equity to borrow against for the next property. Which comes out ahead depends on the growth, and no one can promise that. These are illustrative figures, not a forecast.
Who this does not suit
A higher earner with a long horizon may accept a weekly cost for a property with more land and stronger growth. A cost you can carry for ten years is a choice; one you cannot carry can force a sale.
Which side of that line a property sits on depends on the price, the rent, the loan, your tax and the rules it falls under. Know which side a property sits on before you sign. To run the numbers for yours, book a first conversation. It costs nothing.
Nicholas Lockhart
Negative gearing after 2026: what changed, and who it touches →
Single home, dual income or duplex: a Tweed Heads comparison →
Source: Australian Taxation Office, Tax reform - Boosting home ownership - Reforming negative gearing and capital gains tax (updated 29 June 2026).