negative gearing

Negative gearing tips for Australian expats

The Australian Government strongly welcomes overseas investors in the property market. The term ‘negative gearing’ constantly gets thrown into political discussions by both Liberal and National parties who support negative gearing options.

So, what is negative gearing?

Negative gearing is an established practice where an investor takes out a financial loan to purchase property when the cost of owning the property outweighs the expected income from the property. Negative gearing is considered a form of financial leverage where the investor expects a surge in property value over time which eventually exceeds the cost of holding the property.

An investment property is considered to be negatively geared when the investors’ rental income is less than the total costs of being able to hold the property.

When you are living as an Australian expat, and choose to be a non-resident for tax purposes, Australian expats are able to negatively gear properties. Expats can use any losses from negatively geared properties to offset and reduce any taxable income from Australian earnings.

Tax losses from negative gearing can be carried forward for future tax returns. To get the most from your tax reduction, it’s advisable to maximise any depreciation deductions if applicable.

How can Australian expats benefit from negative gearing? Take a look at the top five benefits of negative gearing:

1. A stable investment that gives the opportunity for expats to use as security to easily obtain low-interest loans.

2. Strategically placed property can result in long-term stable profitable income.

3. Various tax advantages and offsets for Australian expats who choose to negatively gear.

4. Increases the number of tax deductions you’re able to claim – from water rates to maintenance cost to property management costs, expats can take advantage of many tax offsets to reduce their taxable income and gain the most out of their tax returns.

5. Investing in the Australian property gives you a foothold in Australia’s property market (in preparation for your ultimate return).

Negative gearing holds a lot of advantages for the Australian expat looking to profit from multiple income streams and increase their wealth, making it a very attractive option for securing finance and wealth growth for all expats overseas.

Book an appointment with Expat Tax today to discuss expat advice and your negative gearing needs.

Photo: Mortgage by 401(K) 2013 licensed under Creative commons 2
Photo: Mortgage by 401(K) 2013 licensed under Creative commons 2
Shane Macfarlane
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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia).Shane's passionate about tax and legitimate tax minimisation, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.Beyond tax and accounting, Shane's an entrepreneur, having devised, created and founded a successful accounting startup, Fifo Workpapers (acquired by accounting software giant, Intuit inc. in 2013)

In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.
Shane Macfarlane
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