Negative gearing is a practice common in property investing. It is a form of financial leverage that describes the purchase of an income-producing asset, such as a rental property, but when the asset will not produce enough income to cover the cost of the asset. For example, when the rental income is insufficient to cover the loan payments, maintenance, interest, or depreciation for the asset in the short term. Ideally, the asset will eventually produce enough money to cover those costs.

The reason a property buyer would employ negative gearing is that the short-term losses can be beneficial to the owner's tax bill in certain instances.