Negative gearing is a long term approach to wealth creation as you are relying on your investment to grow in value over time.
It’s popular among investors because:
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You can claim tax deductions on any expenses you incur on your investment to reduce your taxable income
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If you invest wisely, your eventual capital returns will outweigh any costs
While this is great in theory, you must be in a financial position to take short-term losses in your stride.
Before negative gearing, remember that:
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You have to budget for shortfalls early in your investment
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If your circumstances change and you have to sell early, the return on your investment might be low
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You’ll pay capital gains tax when you sell the property.
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