All Topics / The Treasure Chest / Quick question on neg & pos gearing

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  • Profile photo of YoungGunYoungGun
    Member
    @younggun
    Join Date: 2003
    Post Count: 18

    Hi

    Just a quick question, I think I know the answer but I would like to be sure.

    When do you class a property negativley geared or positivley geared? For example if I spend $20k per year and receive $15k rental, I have had to put my hand in my pocket for $5k. I may get $8k back from tax deductions therefore I have gained $3k. Is this a positive or negatively geared property???

    Thank you!!![:P]

    Always set your goals further than you can reach
    – Then stretch that little bit further

    Profile photo of ADAD
    Participant
    @ad
    Join Date: 2002
    Post Count: 636

    Hey YG,
    I think the best definiition I have heard on this one is by Margaret Lomas. She divides it into three classes, as follows;
    1. Negative geared – costs money from our pocket each week.
    eg. rent + deductions – costs = -ve

    2. Positive cashflow – After deductions, etc the property puts money in your pocket (not before deductions though)
    eg. rent + deductions – costs = +ve

    3. Positive geared – Before deductions,etc puts money in your pocket.
    eg. Rent – costs = +ve (before all deduction, tax, etc).

    Hope it helps.

    Enjoy
    AD [:0)]

    “Carpe diem, quam minimum credula postero.”
    Lat., “Seize the day, put no trust in tomorrow.”
    -Horace, Odes

    Profile photo of allymanallyman
    Participant
    @allyman
    Join Date: 2003
    Post Count: 14

    Could it be called Negative Geared with Positive Cashflow????

    How To Create An Income For Life by Margaret Lomas goes into this in great detail.

    Ally

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