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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.

Negative gearing

<div class="b-category-pagecustomheader"> <p>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. </p> <div class="page_subheading_desc-content" style="display: none;"> <p>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 <a href="https://www.smartpropertyinvestment.com.au/research/17126-the-challenge-of-negative-gearing-for-property-investors">recent study</a> found that 62 per cent of investors rely on negative gearing to assist in funding their homes.</p> <p>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.</p> <p>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, <a href="https://www.smartpropertyinvestment.com.au/research/17845-why-negative-gearing-is-necessary">experts</a> strongly insist that the abolishment will affect affordable housing the most, thereby, being a counterproductive response to the issue. </p> <p>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.</p> <p>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.</p> </div> <div class="page_subheading_desc-read-more" style="text-align: center; opacity: .8; cursor: pointer;"></div><span class="page_subheading_desc_icon"><i class="fa fa-caret-down page_subheading_desc_icon" aria-hidden="true"></i></span> </div>

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Tax & Legal 24 JAN 2014

Negative gearing could help FHBs

First home buyers could take advantage of negative gearing to gain a foothold in the property market, a leading...

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Hotspots 13 AUG 2013

Why you can't afford negative gearing

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Finance 20 JUN 2013

Refinancing: A negative gearing quick fix

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Hotspots 11 APR 2013

The positive gearing vs negative gearing debate

In my last blog post we looked at what these terms meant and how whether or not a property is negative or positive...

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Hotspots 26 FEB 2013

Positive gearing, negative gearing... what does it all mean?

Let's cut through the maze about Positive gearing vs Negative gearing & Positive Cash-Flow vs Negative Cash-Flow....

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Hotspots 21 FEB 2013

Each case is different with negative gearing

Where do I start? A common question asked by all people who have heard about property investing and understand that...

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Tax & Legal 03 SEP 2012

Negative gearing not valid long-term

Negative gearing is not a valid long-term investment strategy due to the uncertainty of capital growth, according to...

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Tax & Legal 05 APR 2012

Gvt called on to cut negative gearing

A new report has called for negatively geared investors to have their tax rebates cut back, according to a housing...

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Tax & Legal 12 JAN 2012

SMSFs as significant as negative gearing

Self managed super funds (SMSFs) are set to become as important to property investment as negative gearing, according...

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Tax & Legal 06 OCT 2011

Negative gearing is unfair, says economist

Negative gearing is one of a large number of loopholes and concessions in the tax system that detracts from its...

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Tax & Legal 06 JUN 2011

Negative gearing back in the spotlight

Concerns over the future of negative gearing have been reignited following comments from one of the nation’s biggest...

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Tax & Legal 11 MAY 2011

Negative Gearing Here To Stay - May 2011

Speculation that the federal government would use the Federal Budget to make changes to negative gearing arrangements...

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Tax & Legal 22 APR 2011

Negative gearing on the chopping block

Suggestions that the federal government is considering a reduction to negative gearing benefits has been met with...

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Tax & Legal 16 AUG 2010

Negative gearing opportunities to stay

Property investors breathed a sigh of relief this week after the federal government and the federal opposition party...

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Tax & Legal 11 AUG 2010

Negative Gearing Here To Stay - August 2010

In good news for budding investors, the federal government plus the opposition party have ruled out the prospect of...

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Hotspots 30 NOV 1999

The facts about negative gearing

Negative gearing is a popular technique with Australian property investors because of its tax advantages, but it is not...