AUFree

Negative Gearing While Abroad

Does negative gearing still work for non-residents? Short answer: it depends on whether you have other AU-source income to offset.

Key issue for non-residents: Negative gearing offsets other income. But if your only Australian income is the rental loss itself, there's nothing to offset against. The loss carries forward until you have AU-source income.

Scenario Calculator

Annual rental income (AUD)

Annual rental expenses (incl. interest, depreciation)

Other AU-source income (dividends, interest, etc.)

How Negative Gearing Works

When your rental property expenses exceed rental income, the loss (negative gearing) can be offset against your other assessable income, reducing your total tax. This is one of Australia's most widely used tax strategies.

The Non-Resident Problem

Non-residents are only taxed on Australian-source income. If you earn no other AU income besides the rental property, the rental loss has nothing to offset. It carries forward as a prior year loss until you have AU-source income to offset it against — which may be years (or never, if you don't return).

Travel Deduction Restriction

Since 1 July 2017, travel to inspect or maintain rental property cannot be claimed as a deduction (for any taxpayer, not just non-residents). This closed a significant loophole for expats who used to deduct flights back to Australia to "inspect" their property.

When to Consider Selling vs Holding

Factor	Hold	Sell
Rental loss building up?	Useful if you'll return to AU with income	Loss is "wasted" if no AU income
CGT discount?	May recover if you return as resident	No discount as non-resident (post-2012)
FRCGW withholding?	N/A	12.5% of sale price withheld
Cash flow?	Negative — property costs money each year	Positive — capital released

Strategy: If you won't return to Australia soon, the rental loss from negative gearing may sit unused for years. Consider whether the capital growth justifies the annual cash drain — particularly since you lose the CGT discount on eventual sale.