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Negative Gearing
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Disclaimer
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"Negative Gearing" is a term ascribed to the tax advantage gained by financing the acquisition
of dividend yielding shares or rental income earning properties, or; in fact, any
income earning asset.
Tips
 | Never acquire an asset solely
for taxation advantage, always consider the after tax position including
whether you can afford the cash flow "leakage"and whether it is a sound
investment. |
| Do not assume the bona fides of
someone who markets negative gearing
and "has just
the property for you ! " Finance and investment should be viewed independently. |
| Prior to placing your deposit
down, please call for advice as to who, what, and how it should be
financed. See our tips on Finance. Advice in this area is often
more valuable before, rather than after. |
| Income earning buildings,
especially
newly built ones, may have building write off and depreciation entitlements which may save
you income tax in the short term. |
| Property Development
should not be undertaken without a proper feasibility study and professional
legal and taxation advice. Apart from income tax, there are critical GST
and possibly capital gains tax issues which may cost the unwary dearly; often
years after the property is sold. |
| Even older buildings may provide
depreciation write offs. Unless an amount is specified in the contract, you
will need to calculate the written down value of items like carpets and floor coverings.
Call for guidance ! |
| If purchasing shares for
speculative purposes, be aware that you may lose franking credits unless
you hold the shares for 45 days. Call for guidance. |
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