Advertisement
In its simplest form, negative gearing occurs when the interest that investors are paying on the loan is more than the income or rental return generated by their asset. As a tax incentive, it allows investors to claim the costs of holding the asset as a direct deduction on their total income. By claiming deductions, investors reduce their taxable income and, ultimately, their tax payable. As the income tax is reduced, their cash flow is improved.
Together with other benefits and incentives such as first home owner grants, discounted interest rates and special lending standards, negative gearing has, in essence, improved the affordability of housing. In fact, a recent study found that 62 per cent of investors rely on negative gearing to assist in funding their homes.
However, the same study stated that negative gearing, along with other incentives such as capital gains discounts, fire homeowner grants, and the superannuation saver schemes, is costing the government $14 billion.
Political parties have recommended the abolishment of negative gearing, referring to it as an ‘unnecessary perk’ for property investors that hinders first home buyers from purchasing a dwelling. On the other hand, experts strongly insist that the abolishment will affect affordable housing the most, thereby, being a counterproductive response to the issue.
Truly, negative gearing stands as one of the most common points of contention among investors, experts and even the government in the vast landscape of property investment.
Smart Property Investment (SPI) gives you an insight on the different opinions and educational discussions on negative gearing to help you understand the policies that influence the business of wealth-creation across the country, mitigate financial risks that may affect your portfolio and ultimately determine the best strategies that will move your investment journey forward.
In its simplest form, negative gearing occurs when the interest that investors are paying on the loan is more than the income or rental return generated by their asset. As a tax incentive, it allows investors to claim the costs of holding the asset as a direct deduction on their total income. By claiming deductions, investors reduce their taxable income and, ultimately, their tax payable. As the income tax is reduced, their cash flow is improved.
Together with other benefits and incentives such as first home owner grants, discounted interest rates and special lending standards, negative gearing has, in essence, improved the affordability of housing. In fact, a recent study found that 62 per cent of investors rely on negative gearing to assist in funding their homes.
However, the same study stated that negative gearing, along with other incentives such as capital gains discounts, fire homeowner grants, and the superannuation saver schemes, is costing the government $14 billion.
Political parties have recommended the abolishment of negative gearing, referring to it as an ‘unnecessary perk’ for property investors that hinders first home buyers from purchasing a dwelling. On the other hand, experts strongly insist that the abolishment will affect affordable housing the most, thereby, being a counterproductive response to the issue.
Truly, negative gearing stands as one of the most common points of contention among investors, experts and even the government in the vast landscape of property investment.
Smart Property Investment (SPI) gives you an insight on the different opinions and educational discussions on negative gearing to help you understand the policies that influence the business of wealth-creation across the country, mitigate financial risks that may affect your portfolio and ultimately determine the best strategies that will move your investment journey forward.
2 min read 
