Positive and Negative Gearing Explained

To start gearing basically means that the investment has been acquired using finance.  Positive gearing Positive gearing is when the income coming from rent payments is more than the expenses from borrowing (such as council rates, insurance, maintenance and interest). As you are making a profit you will have to pay tax on the property. However this means that even if your investment is not appreciating you are making money. Negative gearing The opposite of positive,  the income generated from the investment does not cover the costs of borrowing. Since you are losing money you can claim the losses as …