Quick question on neg & pos gearing

Viewing 3 posts - 1 through 3 (of 3 total)

YoungGun
Member
@younggun
Join Date: 2003
Post Count: 18
March 4, 2003 - 8:54 am
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!!![]
Always set your goals further than you can reach
– Then stretch that little bit further
AD
Participant
@ad
Join Date: 2002
Post Count: 636
March 4, 2003 - 9:31 am
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
allyman
Participant
@allyman
Join Date: 2003
Post Count: 14
March 5, 2003 - 12:31 pm
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