Negative Gearing vs Positive Gearing
What’s the difference between negative and positive gearing? In summary, an investment property that is negatively geared will cost you money to own after receiving your rental return, whereas, a positively geared property will pay you to own it.
Which one would you prefer?!
What are the benefits of negative gearing your investment property?
Whilst a negatively geared investment property costs you money to own – those costs, in Australia, are tax-deductible.
This makes the cost of owning that negatively geared property cheaper in the hope that your investment will rise.
Generally, investors holding a negatively geared property have an expectation that they will make a profit through the long-term capital gains.
Has negative gearing changed recently?
No, the Labor Party proposed sweeping changes to the negative gearing laws but weren’t elected and have now changed their policy.
Negative gearing still includes costs such as interest on your loan, depreciation claims, strata levies, rates and maintenance.
Should you Negative Gearing Investment Property?
That’s really a personal decision – but you should always check with your accountant before negative gearing.
