There has been much in the press recently about negatively geared investment properties and whether the tax concessions will be reined in.
However we are forgetting that you can negatively gear any investment, it doesn’t have to be property, and no one is talking about changing those rules. You can access the benefits of gearing by borrowing to invest in shares and managed funds.
Geared investment portfolios are a great way to get the banks money working for you, giving you a greater exposure to the market and earnings potential. Interest on loans used to purchase share or managed fund investments is deductible for tax. As are ongoing management and adviser fees.
Various borrowing options are available nowadays including simply using a line of credit on your home loan, or non-recourse loans where at the end of the term you keep shares that have gone up and walk away from those that may have fallen. The loan on any loss making shares is cancelled with no more to pay.
The days of old fashioned share loans with scary margin calls have long gone. Although if you like that kind of thrill we can arrange one for you!
Ten further reasons why you might like to consider gearing into shares rather than property include
- No stamp duty
- No legal fees
- No property agent Fees
- No worrying about tenants
- No rates, insurance or maintenance costs
- No land tax
- No agents commission on sale
- A higher income return
- A higher capital gain over the long term
- Ability to spread the eventual sale over several tax years minimising capital gains tax
For a more detailed discussion as to the multitude of options available and whether this strategy might suit you please give us a call.
Lindsay 0413 952180