Negative gearing [partially] OUT, portfolio-level offsetting [still] IN
I haven’t seen many people talking about this aspect of the proposed negative gearing changes for established properties.
The headline is “you can no longer offset losses from established properties against your PAYG income.”
But for investors with multiple IPs, the practical cashflow outcome can still end up looking very similar.
Example:
• Property A (older IP): Lower debt, higher rent, generating a $15,000 taxable profit.
• Property B (newer IP): Highly leveraged, generating a $15,000 taxable loss.
Under the proposed rules, the loss from Property B can still offset the taxable rental profit from Property A, provided they’re held within the same tax entity.
Result:
Net taxable rental income = $0.
So while the loss can no longer reduce PAYG income, it can still immediately wipe out taxable profits elsewhere in the portfolio. There’s no forced delay if you already have profitable rental income to absorb it.
Which means the proposal arguably hits newer or smaller investors hardest:
• First-time investors
• Single-IP holders
• Younger buyers trying to build a portfolio
Meanwhile, larger or more established investors with diversified portfolios may still be able to neutralise taxable rental income at the portfolio level.
Same same but different.