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Negative Gearing Explained

At the other end of the spectrum, high net earners are attracted to negative gearing because of its tax advantages. The beauty of borrowing or gearing to invest is that it enables you to go into investments that might otherwise be closed to you, whether it is property, shares or bonds. It is important to borrow sensibly because while the gearing can amplify your gains, it can also magnify your losses. In other words, the more you borrow the more you stand to gain or lose and the higher the borrowings the higher the risk. You can get a tax deduction if you have a loss on your investment, and the ultimate capital gain on the property is concessionaly taxed when you dispose of the asset.

For an example of how negative gearing works, how it may work for you, and critical factors that you need to consider, please contact us, telephone Graeme Struck on 555 13 777 or drop into our office for a free brochure.