This is a structure that helps to maximise the cashflow to allow investors to hold the property for long enough, without too much stress on their lifestyle, in order to realise the capital growth.
In time, the rental income should grow and outperform the non-cash deduction in the form of depreciation, once it's no longer able to be claimed.
Political history has shown us that trying to change the structure of negative gearing in this country is career-ending, and as such, the present system places no restrictions on tax payers to negatively gear. Regardless of the income of the taxpayer, the amount of investment properties, the size of the losses, or the period over which the losses can be claimed.
The only restriction relates to depreciation and the ability to claim depreciation on new fixtures and fittings. For this reason, investing in new builds and new property is often preferred by savvy investors, whose primary purpose for investing is to reduce their taxable income.
Investors often say things like, I don't want a negatively geared property, however what they're actually saying is that they don't want their property to have negative cashflow. While it sounds like it's the same thing, it's not, due to the non-cash portion in the form of depreciation. Being able to return more cash into your pocket is always going to be a good thing, there are many other variables to consider to find a good investment. The cash aspect is one part but growth is where you'll make the most from your investment.
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