To positive gear or negative gear? That is the question.
Well first off what the deuce is negative gearing? Simply put, it’s when your rent doesn’t cover the mortgage repayments.
Thankfully for investors the government has allowed this to become a tax break for the time being. Depending on who wins the election, the tax break you get from negative gearing could be scrapped. So if you’re an investor it’s important you read on…
If you need further lending for investments in the short-term (2-3 years), you’ll want to boost the rental income you get from your existing investments as these will be assessed by your mortgage adviser when it comes to working out your serviceability, otherwise you might have to sell a property from your portfolio.
You can turn your investment gearing positive with the help of the following:
Leasing the property through noagentproperty.com.au, means you put in a bit of upfront effort and marketing cost but pay no ongoing commissions to estate agents.
Advertising your property for rent through Facebook or word of mouth could save you loads on both advertising and agent costs.
Refinancing your mortgage to bring down your repayments. Bee Money promises to beat your rate so get in touch today for this one. If you’re paying less, you’ll have less of a rent shortfall to make up in order to positively gear your property.
For any of the bigger stuff. Like sub-dividing or major renovations, it’s important to speak to your accountant to find out the exact figure of your tax saving as a result of negative gearing. Use this figure to decide whether it’s worth putting a bit of time and cash into your property to positively gear it. You can do this by speaking to an estimator or your trusted agent to get an idea of what the likely value increase would be if you added an extra bedroom for example.
