Positive & Negative Gearing

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Phil Griffiths
Phil Griffiths

What is Gearing?

Gearing means borrowing money to invest. Gearing can be used to accelerate wealth creation by allowing an investor to invest larger amounts into property, shares, ETF’s or managed funds that might otherwise be unaffordable.

Positive Gearing

Positive Gearing is when the gross income generated from your investment is more than the cost (including interest paid) of owning the investment.

Negative Gearing

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.

Types of Negative Gearing

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”, where the shares are used as security (Very risky) or a loan using property as security.

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.

Benefits of Negative Gearing

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.

Why Choose Griffiths Advisory for Help With Negative Gearing

Griffith Advisory is a practice that prides itself on being innovative and pro-active, capable of providing you with the highest quality of service at a reasonable cost. This is not just empty advertising.

In a statement made by the Australian Taxation Office, its work-related tax claims are greater than 95.4% when compared with other similar-sized accounting firms. Those numbers are not just mere statistics. It is a reflection of our dedication to go above and beyond when serving our clients, helping you realise your full potential and financial success.

Therefore, when you need help with negative gearing, let Griffiths Advisory be your first choice. Our service will satisfy your interest in investing and will maximise your potential earnings.

Negative Gearing FAQs

What Are the Benefits of Negative Gearing?

Losses made by negative gearing are deductible in the financial year they occurred, giving immediate benefit to its property owner. It is also good for long-term capital growth as the value of the property increases over time.

What are the Risks of Negative Gearing?

Negative gearing impacts personal cash flow. Paying every month could adversely affect your other payables if there is no surplus in income.