Negative Gearing Property and Shares

Negative Gearing (Property, Shares)

Negative Gearing is where you borrow to acquire an investment and the interest and other tax deductable costs incurred exceed the income you receive from that investment.

The most common negative geared investment is rental properties however it can also be applied to other types of income producing investments such as shares using “margin loans”.

Creating wealth through investments is a well-established practice and the additional of borrowing or gearing to invest enables you to buy property or shares that might otherwise be unaffordable.

What makes gearing your investments attractive is the loss that the investment incurs during the year can be offset against other assessable income and the tax benefit will depend on your marginal tax rate.

As with all investments negative gearing can be risky, as while it can amplify your gains it can also magnify your losses.

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