Investing in Property and Negative Gearing

Why invest in property? Property investments are a great way to obtain capital growth and make rental income.

Location, location, location

You obtain capital growth over time after you purchase a property. How much you make depends on the purchase price and the location.

In times of growth, you can make capital gain in any location. When growth halts or slows, properties in locations along or near water, close to the city and close to major shopping centres will generally continue to increase or at least hold their value.

Diversify your investment

Making capital growth can enable you to use the equity in your home to purchase other investment properties, and can also help you diversify your investment portfolio into other areas, like shares, and superannuation.

Investing in other assets gives you a spread of risk. Investing in property gives you an ongoing source of income and can be more constant than other investments.

Diversification makes a lot of sense. We suggest you speak with a financial planner and a stockbroker to get the most out of your investment portfolio.

Negative Gearing

Negative gearing is all about tax relief. A property is negatively geared when the costs of owning it, like interest, fees, rates, and maintenance, exceed the rent you receive for it. With a negatively geared property, you may be able to claim tax deductions on:

Loan Interest
Corporate/Strata fees
Local Government and Water Rates
Gardening expenses
Advertising costs for tenant
Land Tax
Depreciation

To maximize your deductions we suggest you speak with a certified practicing accountant.

Positive Gearing

A property is positively geared when the rent received is greater than the costs of owning the property. Generally, being positively geared means that you might have put up a large deposit, or that you haven’t set up the loan to your best advantage.

The benefit of a positively geared property comes when you sell it. This is because you won’t have to subtract the losses incurred over the life of the investment. Speak with your mortgage planner, financial planner and accountant and take advantage of their expertise in investment properties.