What is positive gearing |
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| FAQ - ABOUT HOME LOANS |
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Positive gearing is when the rental income received is greater than the total amount of the expenses, including interest rate repayments and maintenance expenses, taking into account your rental yield and tax breaks. Also, if the property was built after 19 July 1985, you may be entitled to depreciation allowances that will enable you to claim "paper losses" to reduce your taxable income. Positive gearing relies on the rent being high in comparison to the purchase price of the property. The benefit of a property that generates cash flow is realized when you sell the investment property sometime in the future. This is because you won't have to subtract the losses incurred over the life of the investment, as is the case with negatively geared properties. For more information on this issue you should seek the advice of a financial planner or qualified accountant with experience in property investment. |
| Last Updated ( Tuesday, 25 May 2010 12:39 ) |
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