People often wonder what their options are when it comes to investing in property. Negative or positive gearing? When is the right time to use either option? This article breaks down the basics of negative vs positive gearing and helps you decide which one to choose.
Negative gearing is when you use your home as an investment, and borrow against the equity in your home to generate income. This is different from positive gearing, which is when you use your home as your main residence and use the equity in your home to pay off debt.
Positive gearing has been around for a long time and is often used by people who are in the market for a new home. This is because it allows you to buy a property at a lower price than what it would be worth if you were buying it outright, and then use the equity in your home to pay off the mortgage.
While both negative and positive gearing has some benefits, it's important to consider the implications before making a decision. If you're considering using negative gearing, be sure to understand the tax implications and whether it's appropriate for your situation. If you're using positive gearing, be aware of the potential risks involved and make sure you're getting a fair return on your investment.