How do you negatively gear your investment property for tax purposes?

Answer 1

Gearing = Using debt for investment
Negative = Making a loss

Simply have the costs of the property (interest, rates, insurance, repairs, depreciation etc) be more than the rent you are getting. The loss is then deducted from your taxable income.

If you make a $1,000 loss and you earn a salary between $25k and $75k, you end up paying $300 less tax on your salary.

Negative gearing is most effective for those on the top tax rate, earning $150,000+ per year. They can end up paying $450 less tax by making a $1,000 loss.

Any income producing asset can be used, such as shares, managed funds etc. Importantly, the asset should be growing faster than the inflation rate plus the accumulated debt rate. And don't forget to add in any capital gains tax upon sale.

Answer 2

Set it on fire.