The Negative Gearing Myth

Some veteran real estate investors may disagree, but experts say that negative gearing being good for you is actually a myth. Negative gearing, where your costs such as interest exceed an investment property’s income, is exactly that -- negative. If your costs exceed your incoming, you are still losing money, and no amount of tax refund is going to change that situation.

Experts say that if your costs exceed your income, you are still losing money no matter what the circumstance, and no amount of tax refund will change that fact. Misguided fans of negative gearing often claim it’s a great way to grab back a nice slab of your taxes each year, but experts say no investment decision can be made on tax benefits alone, which is a mistake many investment property owners and home loan holders have made.

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