How to Use Negative Gearing as a Queensland FIFO Worker

Negative gearing has changed, and the date you buy an investment property now matters more than almost anything else. If you work FIFO in Queensland and you are weighing up a rental property, this article explains how the rules work and what to check first.

What Is Negative Gearing and How Does It Work?

Negative gearing is when the costs of owning a rental property, including loan interest, are higher than the rent it earns, leaving a net rental loss. Under the old rules, that loss could be deducted against your other income, including your FIFO salary.

Interest on money borrowed to buy or hold a rental property is deductible to the extent the property is rented or held to produce income. Other holding costs such as council rates, insurance, property management fees and repairs can also be deductible while the property is rented or genuinely available for rent. On a principal and interest loan, only the interest part of your repayment is deductible. The part that pays down the loan is not. Tax outcomes depend on your situation, so speak with your accountant before you act.

How Did the 12 May 2026 Change Affect Negative Gearing?

The rules now depend on when you acquired the property. Properties held at 7:30pm AEST on 12 May 2026, including those under contract and awaiting settlement, keep full negative gearing until they are sold. Eligible new builds acquired after that date also keep it.

For established homes bought after that time, things change from the 2027-28 income year. Net rental losses can then only be used against other residential property income, such as rent or residential capital gains. Excess losses can be carried forward to future years. Properties bought between 12 May 2026 and 30 June 2027 can still be negatively geared under the current rules, but only until 30 June 2027.

This means that if you buy an established property now, losses can still be used against your FIFO salary until 30 June 2027. From the 2027-28 income year they can only be used against residential property income and gains. Interest is still deductible. What has changed is where the loss can be used.

Does Negative Gearing Still Make Sense for FIFO Workers?

It can, but only if the numbers work without relying on a tax refund. Your cash flow has to carry the property, because for an established purchase the loss can only be used against your salary until 30 June 2027.

Consider a FIFO worker on a high roster income who buys an established house after the change. The rent covers most of the repayments but not all, leaving a shortfall each month. Under the old rules, that loss would have lowered their tax bill. From the 2027-28 income year it is carried forward and only helps once the property, or another residential property, produces income or a gain. The outcome is that the shortfall can come out of their own pocket for years. Before buying, they should check they can cover it comfortably, including during a stand-down or roster change. The trade-off is clear. You are holding a property that costs you money in the short term, in the hope of capital growth over the long term. Growth is never certain.

A new build is a different case. Eligible new builds include dwellings on previously vacant land, and dwellings that replace an existing property where the number of dwellings goes up. Losses on these can still be deducted against all income. If you buy new and the dwelling is occupied for more than 12 months before sale to a later investor, that later buyer loses access. Our FIFO house and land package loans page covers how these purchases are financed.

How Do Lenders Count Rent on an Investment Loan?

Lenders usually count only part of your expected rent. APRA's guidance says a prudent lender applies a minimum 20 per cent haircut, so no more than 80 per cent of expected rent is counted.

That haircut allows for time when the property is empty. It is not a deduction for management fees or repairs. Lenders also tend to place less weight on a rental appraisal than on actual rent received, so a property already tenanted can be assessed differently. Individual lenders set their own rules on what rental evidence they accept.

Banks must also test your ability to repay at a rate at least 3.0 percentage points above the loan rate. This applies to new borrowers. It is one reason borrowing capacity for FIFO workers can differ from what a quick online estimate suggests.

Interest Only or Principal and Interest: Which Suits a Negatively Geared Property?

Interest only keeps repayments lower for a set period, while principal and interest pays down the debt from day one. Only the interest is deductible under either structure. Interest only keeps the balance higher, so the interest charged, and the deductible amount, can differ between the two. Ask an accountant how it applies to you.

Interest only does not lift your borrowing power either. Lenders assess it as if you will repay principal and interest over the remaining term after the interest-only period. A 30-year loan with a 5-year interest-only period is assessed over the remaining 25 years.

As an illustration at an example rate of 6.75% p.a., a $500,000 loan costs about $2,813 a month in interest only (500,000 x 6.75% / 12). Over 30 years at the same rate, principal and interest is about $3,243 a month. If that same loan reverted to principal and interest after 5 years, the repayment would be calculated over 25 years and would be about $3,455 a month. These figures are illustrative only. Interest only keeps the balance where it is, so you owe the same amount at the end of the period, and the later repayment is higher. You can read more on interest only loans for FIFO workers.

Using Equity Without Losing Your Tax Deduction

Interest is deductible based on what you use the borrowed money for, not on the property that secures it. Money drawn from equity for a car or holiday is private spending, and the interest on that part is not deductible.

This matters if you plan to release equity from a home or an existing rental. Borrow for the deposit on a new investment and the interest on that portion relates to the investment. Mix in private spending and the deductible portion shrinks. Keeping these loan splits separate makes the paperwork much cleaner for your accountant. Our equity release loans for FIFO workers page explains the options.

If you have an existing rental, a review of your current setup may also help. A loan health check is a good first step.

Questions to Settle Before You Apply for an Investment Loan

Before you apply, check the date you will acquire the property, whether it is established or new, and how much of a monthly shortfall you can carry on your roster income. Then speak with an accountant about your own tax position.

A lender will also look at your deposit, the loan to value ratio and whether lenders mortgage insurance applies. LMI is generally needed above an 80 per cent LVR, and the premium is paid by the borrower. Each lender sets its own limits and policy. Our FIFO investment loans page sets out how we approach this for FIFO incomes.

Talk to us before you sign a contract. Call one of our team or book an appointment at a time that works around your roster, and we will work through the numbers with you.

Frequently Asked Questions