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Negative gearing is a practice whereby an investor borrows money to acquire an income-producing investment property, expecting the gross income generated by the investment, at least in the short-term, to be less than the cost of owning and managing the investment, including depreciation and interest charged on the loan (but excluding capital repayments).
The arrangement is a form of financial leverage. The investor may enter into this arrangement expecting the tax benefits (if any) and the capital gain on the investment, when the investment is ultimately disposed of, to exceed the accumulated losses of holding the investment.
IMPORTANT - You must speak to your accountant before you decide if a negatively geared property is right for you. If you don’t have a good accountant we will be happy to recommend one for you.
Once you have decided that a negatively geared property is right for you, then you have to make sure that the property is also going to show strong capital growth. Remembering that you never receive 100% of your losses back through negative gearing if the property doesn’t increase in value - then you are losing money, and it’s a bad investment.
BIG Property investments has negatively geared property that show both excellent depreciation and strong capital growth while being located in some of Australia’s best investment HOT SPOTS – we spend countless hours researching a location before we choose to start a new project.