Negative gearing
Negative gearing is a practice that is going on in several countries where the investors borrows money that is further used for the producing investment property and also have the certain expectation to have the gross income with the help of that investment. They usually have the expectation to get the financial gain over the investment and also managing the depreciation and the interest charges over the investment (Brown 2015).
The tax treatment of negative gearing is a major factor that allows the investors for getting arrangements along with the additional benefits that are there within the investment. It can also be the reason of the benefits over property. The investors receives additional benefits in the form of taxes.
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The investors who are there in the negative gearing usually have the assumptions for the positive response over their investments and aim to have the better profit over their investment on the property. It is better for the investors to make profit as compared to making loss within the investments that is there with the help of negative gearing (James 2016).
The concept of negative gearing has been common for a very long time that also provides the strategies for the growth and investments within the capital growth rates of the property across the country (James 2016).
Pros and cons of negative gearing
As the other concepts, the negative gearing also has the pros and cons that are having the significant effect over the negative gearing. The major benefit of the negative gearing is seemed to have the incentives with the taxes over the property. It helps the people being financially stable when they retire (Grudnoff2015).
One can have the deposits over the tax deductions and also makes the cost of property along with the other rental costs and interests that affects the taxes within the negative gearing.
The negative gearing in Australia has also reduced the personal income taxes revenue by $600 million in the year 2001. It was earlier as $3.9 billion in the year 2004 and $13.2 billion in the year 2010 respectively (James
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