10 Oct 2021

Clever Solutions for Investment Gearing

Investment Gearing

With investment properties, there are two types of gearing: positive and negative. Positive gearing occurs when the income you generate from your property is higher than the expenses put into your property. Negative gearing is the exact opposite: the income generated is lower than the expenses put into your property. However, with negative gearing, it is possible for your property to appreciate in value over time. At Mortgage House, we want you to get the most out of your investment property, which is why we work with you to find clever solutions for investment gearing, whether your property is negatively or positively geared. 

Pros and Cons of Positive Gearing

Some pros of positive gearing investment properties include:

  • Increasing your cash flow
  • No out-of-pocket expenses for maintaining your investment property

Some cons of positive gearing investment properties include: 

  • Being charged additional tax as a result of your increased income
  • Having to possibly pay capital gains tax if you ever sell your property

Pros and Cons of Negative Gearing

Some pros of negative gearing investment properties include:

  • Being able to claim a tax benefit on your tax return, which is especially helpful if you are in a higher income bracket
  • You can claim the following on your tax return: property maintenance, land tax, land deprecation, etc.

Some cons of negative gearing investment properties include:

  • Decreased cash flow every month
  • Needing to service the extra debt

At Mortgage House, we will work with you to maximise the benefits of your investment property. Whether your property is positively or negatively geared, we offer clever solutions so you can get the most out of your investment.

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