Negative Gearing – hot potato or poison pill?
In Australia over the last 30 years, any spending in pursuit of rental income from an investment property is tax-deductible, unless the spending is of a capital or private/domestic nature. This is known as ‘negative gearing’.
The owner can claim a deduction for the cost of repairing an investment property, but not initial repairs when the property was first purchased.
Some commentators think that negative gearing has distorted the housing market. They point to negative gearing as one of the main factors in housing affordability having halved in real terms over the last 30 years since negative gearing has been in place.