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 it matters more from 2027
From 1 July 2027, losses on established homes bought after 7:30pm AEST on 12 May 2026 can only be set against property income and gains, 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 after June 2027. Cash flow becomes the whole story.
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 to put towards the next property. 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. A cost you cannot is a forced sale waiting to happen.
Nicholas Lockhart
Negative gearing after 2026: what changed, and who it touches →
Single home, dual income or duplex: a Tweed Heads comparison →
General information only. No advice is given.
Source: Australian Taxation Office, Tax reform: reforming negative gearing and capital gains tax (updated 29 June 2026).