Key takeaways
- A positively geared property earns more rent than it costs — a yearly profit.
- That profit is taxable, unlike a negatively geared loss.
- It prioritises cash flow now over relying on capital growth.
- It’s easier to hold through rate rises and vacancies — but often in lower-growth areas.
Most property talk is about negative gearing — losing money now for tax breaks and growth later. Positive gearing is the other approach, and for a lot of investors it’s the more comfortable one: a property that covers its own costs and hands you a surplus each year. It’s less glamorous and fully taxed, but it’s resilient — and resilience matters when rates rise.
How it works
Add up everything the property costs — loan interest, rates, insurance, management, maintenance — and compare it to the rent. When the rent is higher, the property is positively geared, and the difference is income. Unlike a negatively geared property, you’re not funding a shortfall; the tenant more than covers the costs.
The tax trade-off
The catch is straightforward: profit is taxable. Your net rental income is added to your taxable income and taxed at your marginal rate. That’s the mirror image of negative gearing, where you offset a loss. Neither is automatically better — one prioritises cash flow, the other bets on growth. As always, the tax specifics belong with your accountant.
Positively geared properties are often found in higher-yield, lower-growth areas, while high-growth areas tend to run negative. Many investors blend both across a portfolio — cash-flow properties to hold the strategy together, growth properties to build wealth. Your borrowing power and loan structure shape what’s possible.
Who it suits
Positive gearing suits investors who value income and stability — who want a property that pays its own way, is easy to hold through rate rises and vacancies, and doesn’t depend on the market rising to make sense. It pairs well with sound loan structuring, including avoiding cross-collateralisation so each property stands on its own.
Broker Insight. Cash-flow-positive properties are easier to hold through rate rises and vacancies. We often help investors blend them with growth properties so the overall strategy stays resilient.
Build the strategy that fits your goals
Whether you want cash flow, growth, or a blend, we’ll structure your investment lending to match — and keep your borrowing power intact for the next one. Free, no obligation.
Book your free game plan callFrequently asked questions
What is positive gearing?
A property is positively geared when the rent it earns is more than the total cost of owning it — loan interest, rates, management, maintenance and the rest. The surplus is income in your pocket each year. The trade-off is that this profit is taxable, so you pay tax on it. Positive gearing prioritises cash flow now over relying on capital growth to justify the investment.
Is positive or negative gearing better?
Neither is universally better — they suit different goals. Positive gearing gives you income each year and is easier to hold through rate rises and vacancies, but the profit is taxed and these properties are often in lower-growth areas. Negative gearing runs at a loss you offset against tax, betting on capital growth. The right choice depends on your income, cash flow needs and strategy.
Do I pay tax on a positively geared property?
Yes. Because a positively geared property produces a net profit, that profit is added to your taxable income and taxed at your marginal rate. This is the flip side of the cash-flow benefit. Good structuring and depreciation can reduce the taxable amount, so it’s worth planning with your accountant — while we make sure the loan itself is set up to support your strategy.
This guide is general information only and does not take your personal circumstances into account. It is not financial or credit advice. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation.