Positive cash flow vs negative gearing.

"Positively geared" and "negatively geared" are usually described as opposing strategies. They are actually two positions on one line — and the line moves with interest rates, rent and tax. The question is not which label you prefer. It is whether the property can be held through the years when the label changes.

What the labels actually mean

A property is negatively geared when its deductible costs exceed its rental income, producing a taxable loss that reduces your other income — and therefore your tax. It is positively geared when the rent covers the costs and the property produces taxable income (and usually cash flow). In both cases the tax effect flows the same direction: it is a function of the taxable result, not a strategy you switch on.

The tax effect is a result, not a goal

Negative gearing is often sold as if a tax refund were the prize. It is not. Every dollar of tax saved was preceded by roughly a dollar of loss (at a marginal rate below 100%, the loss always exceeds the refund). A negative tax effect is a partial refund of a loss you actually paid. The only legitimate question is whether holding the loss-making years sets up a better position later.

The trade in one table

	Negative gearing	Positive cash flow
Rent vs costs	Rent below deductible costs	Rent above costs
Weekly cash flow	Contribution from your pocket	Surplus after costs and tax
Tax result	Loss reduces taxable income	Income adds to taxable income
Relies on	Future capital growth	Rent holding up
Main risk	Rates rise or growth disappoints	Vacancy or maintenance erodes the surplus

The interest-rate lever

Most of the line between positive and negative is interest. A $720,000 loan is 0.5% away from changing the weekly contribution by roughly $69. Model your property across rates, not just today's rate — the calculator shows the weekly contribution at +1% and +2%.

Which one fits your situation

Negative gearing suits investors with taxable income to shelter, capacity to fund the weekly contribution, and a property they can genuinely hold. Positive cash flow suits investors prioritising income — often closer to retirement, or borrowing at capacity — who cannot fund years of shortfall. The honest answer always falls out of the same numbers: purchase price, rent, occupied weeks, interest, expenses and your marginal rate.