At Accrue Real Estate, we assist people to locate and evaluate investment property. Perhaps the most often asked question that we receive in emails and on the telephone is, "Why should I use negative gearing?"
"Tax is your money ! Get it back ! " That is my standard initial response. Money paid in tax to the government by salary and wage earners all around Australia is gone forever. I encourage our customers when they are considering a negative gearing property investment strategy, to start as soon as possible.
Every worker will pay tax for an extended period of time and it adds up. Recently released statistics revealed that people on average, will work around 10,000 hours before they retire. The amount of tax that an unprepared PAYE citizen will pay is staggering ! But, there are legal and sensible options to reduce tax.
Every Dollar that is saved can be used to make maybe $1.10 for the worker every year. With compounding interest, every dollar invested in theory could double every seven years.
Through the purchase of a ( very carefully selected ) investment property, a tax payer can set off losses on the ownership of the property against PAYE income and in so doing, reduce the amount that is lost forever to tax.
Investment property ownership is responsible investing. Properties have to be designed, created, sold and financed and along the way, jobs are sustained in the real estate, building, legal and finance industries.
Rental homes owned by every day "Mum & Dad" negative gearing investment owners provide family homes for people in all socio economic groups all around the nation. Social cohesion is achieved as there are few, if any, really rundown pockets of low socio economic groups.
We advise all of our investors to choose wisely when selecting an investment. If they choose well ( with the right real estate advice ) they could sell the property in the future and put the profits into retirement or the capital could be used to pay off another mortgage. One thing is for sure, these desirable outcomes will not happen for people who choose to pay tax at the full rate for their entire working lifetime.
Negative gearing is the subject of adverse social commentary in some uninformed circles but the government approved strategy is a win - win as produces good financial outcomes for many families and at the same time, creates homes for other families.
It is important to take time to research and evaluate potential investments with a property professional to avoid "rookie errors" that may impact capital gains, the amount of yearly tax deductions and lifetime occupation rates.
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