You don't buy property with a view to negative gear. It is an investment, designed to MAKE MONEY, not to lose it. Depending on what you buy, it may be, in the short term, negatively geared, but it does not stay that way.Hello,
I have invested a fair bit in my own primary residence and in shares and instead of just putting more and more into my share portfolio which is mostly blue chip stocks like banks, manufacturing, resources and retailing etc I am looking at diversifying into the property market and see negative gearing as a good way to draw down my income tax from my job and realise capital gains.
Since my job is a technical role and in no way does it have any form of business, investing or commerce element to it - I am a bit lost as to how to go about it.
I do enjoy it. I go to the U.S. every year skiing and don't need a flash car like a Merc or BMW. I give about $15K away each year to Cancer Council and about $5K to the royal flying doctors. I live a fairly modest life for the income I receive and like to walk around in my crappy shorts and thongs so am unassuming and like to stay that way but not drawing unnecessary attention to myself.
There is your tax deduction.
Open an offset account against this loan. Put your $400k into it. It has the same net effect as paying down the loan, but the cash is accessible, and at the same time it keeps the loan amount intact, so that, should you decide to move and turn this place into an IP, the loan amount will be tax deductable..My apartment was bought for $1.245 million and have about $500K left to pay on it.
I'm keen to pay of the loan but like to have a good cash reserve in the bank and don't want to just keep topping up my woollies and bank shares all the time.
I would like you to stop and not do anything till you get up to speed with these basics, even if it means being in cash for 6-12 months whilst you do it. Or just pay your home loan off whilst you learn
Read these forums, book some hours with an accountant and get them to explain gearing, leverage, tax law etc, read books on investing
^^^^ With the exception of the offset account, THIS!!!!