How to profit from negative gearing investment properties

Negative gearing for property investment is a common practise in Australia, and has allowed many new and seasoned investors to purchase rental properties and reduce their taxable income.

If you’re thinking about entering the property investment market for the first time or want to increase your investment portfolio, negative gearing is a great choice. With a sound investment strategy, negative gearing can serve as a very powerful instrument in building assets for retirement.

So what is negative gearing?

A property is negatively geared when the costs of ownership exceed the income from the property.

Some of the costs of owning an investment property include the interest on the property loan, bank charges, maintenance, repairs and depreciation. Since the costs of producing an income are generally deductible against a taxpayer’s other income, when your property loan costs are greater than the rent received, the Australian Taxation Office allows you to offset the loss against your income.

Depending on their circumstances, property owners can claim revenue expenses (council fees, bank fees, cleaning expenses, gas, water and insurance), claims for capital items such as white goods and hot water services, and claims for building allowances.

In summary, with a negatively-geared investment you make a cash loss, but the effects of this cash loss are absorbed by the Australian tax system.

Negative gearing for property investment is an opportunity that can yield significant returns, but no investment strategy is without risk. For more information on how you can offset your investment costs against your income, contact the team at Residential Projects Australia. Our property investment consultants have helped hundreds of Australians reach their financial objectives with smart property investment strategies.

Call us on 1300 989 542 for a free consultation and we’ll take you through the process and show you the way.

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