Determining +ve and -ve gearing

Viewing 5 posts - 1 through 5 (of 5 total)

tlgsydney
Participant
@tlgerdes
Join Date: 2015
Post Count: 7
January 16, 2015 - 5:09 pm
Hi,
Just want consensus on determining +ve gearing versus -ve gearing, in general?
If you are paying a PI loan is your capital repayment counted as a “cost” when determining gearing as opposed to essentialliy forced saving. Now I know that I cant claim the capital repayment component, just trying to get it straight in my head about is an investment +ve or -neg when paying down a PI loan
Eg
If I have an IO loan I pay 1000p/m in repayments + 400p/m in outgoings and receive 1500p/m in income I have +ve of 100p/m
If I have PI it bumps it up to $1500p/m in repayments + 400p/m in outgoings, receive 1500p/m in income I have -ve of 400p/m
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 16, 2015 - 5:14 pm
The principal reduction would be considered as enforced savings.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
tlgsydney
Participant
@tlgerdes
Join Date: 2015
Post Count: 7
January 16, 2015 - 5:35 pm
Thanks Richard
Corey Batt
Participant
@cjaysa
Join Date: 2012
Post Count: 1,010
January 16, 2015 - 10:11 pm
Definitely forced savings. Same goes for paying down your principal place of residence or an investment property.
Efficiency wise however, paying down non deductible debt first is far more effective than investment.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 17, 2015 - 8:37 am
Maree with Corey but in Tigs situation he has no non deductible debt and has a good rental cash flow from his other properties.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender