Doctors: The Legal Tax Loophole Using Negative Gearing & Shares 

You're a doctor. You work hard, you earn well, and at some point , someone told you the answer to all your tax problems was to buy an negatively geared investment property.  Maybe you did and its worked for you as it has for many of our clients, until now of course,  because of the recent changes to negative gearing in the 2026 federal budget.

In short, unless you buy a brand-new rental property, which usually means paying a premium , you can’t claim the negative gearing loss against your other income. Instead, the loss is quarantined until the property starts making a profit.

So, what are the alternatives?

Here’s The Secret: You Don’t Need a Property To Negative Gear

For years, doctors have been told that the way to get a tax deduction from investing is to buy an investment property. But there’s another option. You can borrow to invest in Australian shares, claim the interest expense against your other income, and potentially receive a tax benefit from the resulting loss. No tenants. No property managers. No stamp duty. No broken hot-water systems at 2am. And unlike some of the recent changes affecting property investors, negative gearing on Australian shares remains available.

So if you’re a doctor on a high marginal tax rate, the question isn’t just “Should I buy an investment property?” There may be a much simpler way to put negative gearing to work using shares.

How Negative Gearing Works

Negative gearing just means this: you borrow money to buy an investment, and right now, the investment costs you more to hold (interest) than it pays you (income). That loss gets deducted against your other income, your surgery income, your hospital salary, whatever it is, at your marginal tax rate.

With shares, there's a bonus round most people forget about: Franking Credits.

When an Aussie company pays you a dividend, it's already paid tax on that profit, 30 cents in every dollar, roughly. The company hands you a little tax voucher (the franking credit) saying "hey, we already paid tax on this, don't make him pay it twice." You get to use that voucher to reduce your own tax bill.

A rental property gives you none of that. Every dollar of rent is taxed at your full rate, no voucher, no mercy.

Let's run the numbers

Say you borrow $200,000 -  by tapping equity in your home - and buy a nice, boring, diversified basket of ETF's in the top 300 Australian Companies. Fully franked. Yielding about 4% cash.

So: you're $13,000 out of pocket in interest, you get $8,000 back in cash dividends, and there's a $1,571 "loss" you can claim against your other income. On top of that, you get to use that $3,429 franking voucher to knock straight off your tax bill, not a deduction, an actual credit.

Add it up, and on the top tax bracket, you're looking at a combined tax benefit of somewhere around $2,300 to $2,700. Your actual out-of-pocket cost, after tax, ends up a lot smaller than that scary $13,000 interest bill first suggests.

But remember, you're not doing this just to get a tax deduction, you're doing it because you want to build your wealth. 

What are the returns on shares compared to other asset classes? 

This short video from Vanguard illustrates how shares have historically compared with other asset classes over the long term. Past performance is not a guarantee of future results, but the video offers a useful, high-level illustration of how different asset classes have behaved over time. It's general information only, not a recommendation. Your own research and investment decisions should be based on your personal risk profile and circumstances.

Why this might actually suit you

You already own a home. There's a decent chance you also own , or part-own,  your practice premises. That's two big, illiquid, property-shaped eggs already in the basket.

A geared share portfolio is a genuinely different kind of asset. It's liquid, it doesn't need a property manager, and the tax mechanics (thanks to franking credits) work a little differently in your favour compared to bricks and mortar.

It's not for everyone. If watching your portfolio value bounce around keeps you up at night, this isn't your strategy. Gearing amplifies both the wins and the losses. Remember, investing is a long trem buy and hold strategy and completely different to share trading, which is basically gambling. 

You Need To Hear This Loud and Clear

Don't gear into shares or property, or anything, just because of the tax break. The tax benefit is the seasoning, not the meal. If you wouldn't want to own the shares without the deduction attached, that's your answer.

But if you're a doctor sitting on a pile of home equity,  or money in your offset account, and are already property-heavy through your practice, and looking for a genuinely different way to build wealth outside your medical income, this is a conversation worth having.