Upload File

understanding negative gearing. negative gearing what is it? why do we use it? how do we use it? ...

  • Home
  • Documents
  • UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?
15
UNDERSTANDING NEGATIVE GEARING

Upload: faith-gerald

Post on 01-Apr-2015

217 views

Category:

Documents


2 download

Report

TRANSCRIPT

Page 1: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

UNDERSTANDING NEGATIVE GEARING

Page 2: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Negative gearing

What is it?

Why do we use it?

How do we use it?

When do we use it?

Page 3: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Definition

The gearing (borrowing for) of an investment whereby the expenditure exceeds the income.

This negative income reduces the normal taxable income and therefore provides a tax rebate.

The tax rebate is then used to help finance the interest costs of the investment.

Page 4: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

The Purpose

Tax rebating (valid way to reduce taxable income).

Someone else helps to make your repayments!

A popular way to create wealth.

Page 5: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

When is it used?

Best utilised when income exceeds $50k pa.

Or when the owner occupied residence is paid off.

(Ownership of your own home still remains the best tax effective investment).

To create wealth for retirement income.

Provide an asset for children.

Page 6: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Ways To Borrow

Any way a lender will loan to you.

However it is important to know that it is only the Interest Portion of a repayment that is Tax Deductible.

Most investors borrow interest only and ‘generally’ for a fixed term to obtain maximum tax benefits and insure against interest rate volatility.

Page 7: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

However, if it is a pure ‘asset accumulation’ exercise, borrowers may take advantage of variable rate loan reduction programmes.

Split (fixed / variable rate) facilities also provide good insurance as well as providing flexibility.

Page 8: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

The Mechanics

Income $60,000

Tax $16,480

Nett $43,520

Income $60,000

Rent $9,360

Int/Costs $15,000

Tax. Income $54,360

Page 9: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Tax $14,027

Tax Refund $2,453

Total cost $15,000

Rent $9,360

Tax refund $2,453

Borrower $3,187

Total $15,000

Weekly cost to borrower $61

Page 10: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Tenant63%

Borrower21%

Tax Refund16%

The Percentages

Page 11: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Does it have to be negative?

No!

You can gear neutrally.

(Which means that the borrowing is structured so that the income is equal to the outgoings.)

You can gear positively.

(Which means the income exceeds the outgoings providing extra income.)

Page 12: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Pitfalls…how to avoid them!

Liquidity

Unemployment

Sickness/Death

Bad tenants

Distrustful tenants

Page 13: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Have a ‘buffer’ fund and use the 221d tax adjustment (Insurance also)

Adequate Insurances in place

Find a good Managing Agent

Insurance policy +above

Page 14: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

Be Sure

We strongly recommend that you receive independent advice from their financial adviser or Accountant.

We’ll come along with you if you wish.

Page 15: UNDERSTANDING NEGATIVE GEARING. Negative gearing What is it? Why do we use it? How do we use it? When do we use it?

That’s all for now folks!

We will be very happy to complete your own personal analysis.


Philip Soos Written Off Negative Gearing Presentation Oct 2012

Negative Gearing and Welfare: A Quantitative Study …...Negative Gearing and Welfare: A Quantitative Study for the Australian Housing Market Yunho Cho† Shuyun May Li‡ Lawrence

Gearing Up for Growth Using Multi-speed IT innovations that can fuel growth and high performance. ... 7 Gearing Up for Growth Using Multi-speed IT ... drive and fly all at the same

Is Negative Gearing an Investment Property a Drain on the ......Is Negative Gearing an Investment Property a Drain on the Australian Economy? Of at least $5.6 billion dollars paid

Negative Gearing & Property - Suntax · Negative Gearing and Property is a valuable resource available to clients in conjunction with a negative gearing consultation. It explores

Approach Paper on Gearing BSNL Network For NGN … base/NGN/Gearing BSNL for NGN...Approach Paper on Gearing BSNL Network ... BSNL’s Network Planning Group has ... it will make the

9M 2019 RESULTS PPT - olamgroup.com · Net gearing Adjusted net gearing Net gearing (ex SFRS(I) 16) Net gearing at 1.37x Excluding impact of SFRS(I) 16, net gearing improved to 1.28x

Gearing strategies January 2012. What is gearing ? Borrowing money to invest Not all gearing is negative Gearing increases profits but also increases

Regulating more effectively: The relationship between ... · negative gearing an investment property. Alternatively, there are strategies that may ... In fact, research into reactance

Negative Gearing and Welfare: A Quantitative Study for the ... · Negative Gearing and Welfare: A Quantitative Study for the Australian Housing Market ... Sydney MRG workshop and

This is… Gearing Up For War How it All Started

Gearing Up for Growth Using Multi-Speed IT | …...4 Gearing Up for Growth Using Multi-speed IT One size fits few Multi-speed business requires a multi-faceted IT operating model

Negative Gearing & Property - Accountants Toowong · 2014. 7. 22. · Negative Gearing and Property is a valuable resource available to clients in conjunction with a negative gearing

Property Management Guide · Investment properties may be ... NEGATIVE GEARING Negative gearing is a common term associated with property investment. Put simply, it refers to the

Written Off: Negative Gearing - Prosper Australia · Finance, La Trobe University), David Collyer (Campaign Manager, Prosper Australia), Karl Fitzgerald (Projects Coordinator, Earthsharing

12 JUNE 2015 AUSTRALIAN HOUSING INVESTMENT · 3.4 Myth 4 — negative gearing does not add to housing supply 21 3.5 Myth 5 — Negative gearing and CGT 50 per cent discount increase

Gearing Up for Growth Using Multi-Speed IT | Accenture Gearing Up for Growth Using Multi-speed IT Accelerating to multiple speeds Enterprises are asking a lot of today’s CIO without

NEGATIVE GEARING & HOUSING AFFORDABILITYresearch.economics.unsw.edu.au/.../negative-gearing... · BLP FOR HOUSING • Housing quality as unobserved variable, recover using market

Negative gearing and capital gains tax reform · Hot property: negative gearing and capital gains tax reform Grattan Institute 2016 2 Overview A substantial change to Australia’s

NEGATIVE GEARING EXPLAINED · this strategy is sometimes called speculative investing. Negative gearing requires you to have the income to make up the shortfall between the cost of

Property Investment Guideloanseeker.com.au/wp-content/uploads/2016/10/Loan... · Negative Gearing Negative gearing is another strategy that can work in your favour when it comes to

Negative Gearing & Property - Yellowpages.com€¦ · Negative Gearing & Property reating wealth through purchasing an investment property is a well established practice in this country

Negative Gearing & Property - MGR Accountants€¦ · Negative Gearing and Property is a valuable resource available to clients in conjunction with a negative gearing consultation

Written Off: Negative Gearing - Prosper Australia€¦ · Written Off: Negative Gearing ... holds MBA and IT degrees from RMIT University and ... If John can cope with losing almost

The Pros & Cons of Negative Gearing. - Snelleman Tom · 2019. 2. 27. · Negative gearing is a legitimate strategy for wealth creation. Per the above, it’s the quality of the investment

Negative Impact of IT

Gearing Up for Growth Using Multi-speed IT · 2017-09-27 · 4 Gearing Up for Growth Using Multi-speed IT One size fits few Multi-speed business requires a multi-faceted IT operating

Negative Gearing & Property · 2018. 10. 1. · Negative Gearing & Property Creating wealth through purchasing an investment property is a well established practice in this country

Levelling the Playing Field - UNSW Business Schoolresearch.economics.unsw.edu.au/richardholden/...Levelling the Playing Field The Economic Case For Reforming Negative Gearing ... McKell

The Month In Review - Home Sweet Loans · 2013. 7. 20. · gearing their investment properties and claim a loss against their income. Many people are attracted to negative gearing

NEGATIVE GEARING FLETCHER'S I CASE · Negative Gearing : Fletcher's Case 93 (a) Objective Purpose '...it is commonly possible to characterise an outgoing as being wholly of the kind

A gearing forest automaton to automate a gearing system

Negative Gearing

Personal - npaccounting.com.au€¦ · Depreciation, negative gearing and more! Retirement Reduce your tax liability in retirement ... Effective tax planning is something that should

The Pros & Cons of Negative Gearing. - Snelleman Tom · Gearing in its simplest form is borrowing to invest in an investable asset e.g. Property, Shares, Managed Funds. The ‘negative’