We have often warned that negative gearing is really only good when house prices are rising. Now the mainstream media is ringing the same bells.
The Sydney Morning Herald writes:
In a rising property market, negative gearing can be a good strategy to build wealth – but watch out when values fall.
There are plenty of reasons why Australians love to borrow money to invest in bricks and mortar.
Some people think the value of property never goes down; others like the fact you can see and touch it.
The article provides some good advice. Adrian Raftery, the founder of Mr Taxman is quoted saying:
“If a property market is stagnant – like we are experiencing in Australia – then you will be falling behind. If the property market falls like it has around the world, then you are in a dire situation.”
And Adam Zahra, a mortgage broker with Loan Market and a property investment consultant with NPA:
”It is pointless to purchase an investment for tax savings if it doesn’t provide you with a return,”
Read the entire article here.
» Negative gearing: time to rethink your approach – The Sydney Morning Herald, 4th December 2011.