Glossary · Australian property
Carry-forward losses.
Tax losses that can't be fully deducted in the year incurred but carry forward to offset future income.
Under ITAA 1997 Div 36, capital losses on CGT assets can only offset capital gains (not other income). Unused capital losses carry forward indefinitely until offset by a future capital gain.
Revenue losses (e.g. negative-gearing rental losses) generally offset other income in the year incurred. If they exceed total income, the excess carries forward as a non-commercial business loss. Property rentals are usually treated as 'investment' not 'business' so this is uncommon.
For most investors: capital losses on property sales are the relevant carry-forward bucket. Holding losses on duds until you have a capital gain to offset (e.g. selling a different property) is a deliberate tax-management strategy.
Source
ITAA 1997 ss36-15 + 102-10 (capital losses); ss35-1 to 35-55 (non-commercial losses).
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