Investors flock to QLD as vacancy rates stay ridiculously low
Showcasing the popularity of Queensland as an investor haven, new investor loan commitments in the state reached $1.86 b...
Ben Kingsley, Director, Empower Wealth
Negative gearing is an important part of how you invest in property for those people who may be on good incomes. How it works is simple; you basically have out goings, which is the interest and the holding costs of the property, are exceeding the income, the rent that you're receiving. So for investors who are looking to use negative gearing, it's a great way to get into the market, minimize the tax that you're currently paying through your PAYG or through your business. Over time that asset's going to grow in value and as that asset grows, so does the rental income. So that negatively geared property in the early stages, with the capital value appreciating, also with the increases in the rent, will turn positively geared and give you a wonderful passive income for life.
Negative gearing occurs when the rental income of a property is not enough to cover the total costs of managing the rental and re-paying the interest portion of the loan.