Why invest in property, as opposed to shares or term deposits?
In plain terms, negative gearing allows people to borrow money to purchase an income producing property, to claim a tax deduction for many expenses they incur running that income producing property … including loan interest. You tax rebates, along with your rental income are used to pay off your loan, with the tiniest in amounts coming out of your own pocket. The end result … down the track, the tax man and your tenants will have paid most of your running costs for you and your property will have more than doubled in value, so you can now sell it and earn a tidy profit, or use this system to accumulate multiple properties to use the rental income as part of your retirement portfolio. In the early stages of investing in a negatively geared property, your costs like interest and so forth, are higher than the rental income you receive, so your property is negatively geared. Apart from negative gearing, there are two other types of gearing situations which offer you even more benefits.
