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WHAT THE HELL IS “NEGATIVE GEARING” 

WHAT THE HELL IS “NEGATIVE GEARING” 

 

Here we go.... it’s flung around like a football at an NRL game. Half of the conversations I have with people ask about it, but have no idea what the hell it means. 

 

So let me try and make this as simple as possible  

 

*disclaimer – go and talk to your accountant / advisor – this is general advise, blah blah blah” 

 

So Barbara has purchased an investment property – she pays $30,000 in interest payments per year on that property with her mortgage. For arguments sake she makes $20,000 per year in rental income. She also spent $5,000 on maintenance. 

 

Barbara makes $100,000 per year... 

 

$30,000 + $5,000 (outgoing) take away $20,000 (income) equal to - $15,000 

Barbaras income $100,000 minus $15,000 – Barbara pays tax on $85,000. 

 

Negative gearing explained... be mindful, unless you’re doing really well for yourself, being negatively geared too heavily means you may have poor investments. Ultimately “profit” always wins! 

 

Over and out... book a discovery call - link in comments 

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