Tax Minimisation Strategy #2 – Negative gearing (rental properties)

Tax Minimisation Strategy #2 – Negative gearing (rental properties)

Negative gearing is a strategy used by investors to reduce income and save tax. Negative gearing is created due to the yearly income not being sufficient to cover the costs of financing and maintaining the property (or shares), so there is a loss (negative profit) on the investment. This loss is offset against your taxable income and reduces the amount of tax that is payable.  Rental properties that have significant loans are usually running at a tax loss (negative gearing) each year, which helps taxpayers reduce their tax obligations.

Pat Hoey