Should You Use Negative Or Positive Gearing On Your Investment Home?

Negative gearing is a strategy in which you borrow money to purchase an investment property. The hope is that the property will increase in value, and you can then sell it for more than you originally paid. This strategy has two main benefits.

First, it allows you to use the proceeds from the sale to cover your initial loan payment and other expenses associated with owning the property. Second, it can provide a buffer against economic fluctuations, helping to protect your investment over time. You can visit this website to know more about negative vs positive gearing investments.

negative vs positive gearing

On the other hand, positive gearing is a strategy in which you invest money in an investment property. The hope is that the property will increase in value, allowing you to make a profit both now and in the future. While this strategy has similar benefits to negative gearing, there are also some drawbacks. For example, if the value of the property decreases, you may be required to sell it at a loss or continue paying off your loan even though you no longer own the asset. Additionally, positive gearing can lead to increased taxes and responsibility when it comes time to sell the property.

Ultimately, whether or not to use negative or positive gearing on your investment home depends on your specific goals and circumstances. If you're primarily concerned about covering your costs and protecting your investment, negative gearing is a reasonable choice. If you want to improve your returns, positive gearing can be a great way to do that.

Hopefully, with this information, you can decide which strategy you should use for your investment purpose.