Negative Vs Positive Gearing: Which Investment Strategy Is Best For You?

The property market is always changing, which means that there are a variety of different property investment strategies that you can use to achieve your desired outcome. As you know negative gear and positive gear as a strategy  popular for property investment. Know about them here!

Positive Gearing: It is when you use your own money to purchase a property, and then sell the property for more than you originally paid for it. This strategy is beneficial because it allows you to make a profit on your investment. However, negative gearing is also possible in certain circumstances.

Negative Gearing: It is when you use money from outside of your property investment to cover the costs of owning the property. This means that you are not making a profit on the property, but instead are using losses as an income source. It’s important to be aware of the limitations of negative gearing before investing in this way.

Difference Between Negative And Positive Gearing

There are some key differences between negative gearing and positive gearing that should be considered before making a decision:

  • The losses incurred through negative gearing can be offset against other income, such as rental income or capital gains from selling other assets. This allows investors to keep more of their money overall.

  • The losses incurred through positive gearing cannot be offset against other income, meaning that the total amount of money that an investor can make from this type of investment is limited.

While both these strategies have their positives and negatives, choosing which one is right for you depends on a variety of factors specific to your situation.