NEGATIVE GEARING

  1. What is negative gearing?

  2. Examples of negative gearing

  3. Long term growth and the main asset classes

  4. Example of negative gearing share portfolio

  5. Debt and the prudent investor

  6. Don't mix your debts

  7. It's not about the tax

  8. Positive gearing

Contents

Introduction

 

It is our pleasure to offer you this Guide to Negative Gearing. The guide is one of a series of guides that we have developed in conjunction with our licensee, Dover Financial Advisers Pty Ltd. Our guides are designed to provide clearly-written, objective information about various elements of high quality financial planning.

Most people have heard of negative gearing. Negative gearing is where the income from a geared asset (that is, an asset that is bought using borrowed money) is less than the interest and other holding costs related to that asset. This creates a loss – hence the word ‘negative.’ Investors can usually offset this loss against other income for tax purposes. This creates a tax benefit, in the form of less tax being paid than otherwise, and this tax benefit in a sense adds to the investment return on the asset.

Negative gearing can make a good investment even better. But it won’t turn a bad investment into a good one. In this guide, we show you how to use the benefits of negative gearing to add real and permanent value to your investment performance.

Please feel free to pass this guide on to any other person who you think would find it beneficial. And, if you would like to discuss your own super situation, please do not hesitate to contact us.

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1. What is negative gearing?

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