Negative gearing: time to rethink your approach

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.

ยป Negative gearing: time to rethink your approach – The Sydney Morning Herald, 4th December 2011.


  1. How times are changing. No piddly rate cut is going to reflate this puppy. I wonder if the smart property investors are laughing all the way to the bank now.
    What a charade of political crap forcing the banks to pass the cut on. Its all a game and unfortunately, the name of the game is to destroy people’s wealth so they have no power. Welcome to the soft depression….

    Maybe if people like the feel of bricks and mortar they should consider returning them to a bank branch near you, by way of express thrown mail!!!!

  2. @Where will it all lead, in that case I’d hate to have, “…we have a strong banking system with sound economic fundamentals…”, explained to me. Oh no! And certainly not the preverbal “…there are green shoots everywhere…”. Sounds like the chocolate rations have increased again from 30gm to 20gm (and the poeple love it!).

    War is peace
    Freedom is slavery
    Money is debt

    Bellyfeel…! I love it, or should that be, triple+good Comrade. If you end up here;

    keep out of room 101.

  3. As Yoda said beautifully “its a game”!!!!!

    I know one up there executive, working for one of the major banks. Decided to resign because they were told to sell products to consumers that did squat for them. The dishonesty is rampant and people don’t have a life at all, but a debt they can’t service.

    Vendors are up in arms because they are not receiving the price they want. Like houses are really worth that much,mmmm, only to those who are gullibly and no nothing about the economy and what is happening.

    The placid will always follow, but the strong will always lead.

  4. It is a soft depression as we live in a welfare country, unlike the 1930’s where you relied on the community, churches, friends and family to help through the tough times. We are nowhere near as self reliant now.

    Doof Doof cars and fancy clothes don’t satisfy the stomach when the times get tough.

    But , we have handouts galore where new arrivals earn more than the average wage, and people are rewarded with welfare for failing. Go figure – anyway enjoy paying your tax , and quit winging about it.

    All hail the UN state of Australia and bring on the destructive carbon tax to really stick it to the masses and destroy wealth. Watch the spike in house fires/deaths from the increased use of candles. More firewood BBQ’s etc….Carbon pollution anyone?

    We are in a credit depression as the Daily Reckoning so nicely put it today where so much of our societies viability is based on going further into debt to consume today, and that is slowing/ reversing

    Has the madness of a lost society been Youtubed yet for this year?

  5. @AverageBloke, the Economy has crashed for many (tonnes) of people. For few it couldn’t be any better. Back to negative gearing, though I disagree with it and reckon its’ has to go, it is here to stay for a long while. No government wants to be the one that gets rid of it. Australians are such property fanatics, even a financial disadvantage on a property purchase doesn’t stop them from buying one, then attempt another purchase.

  6. @AverageBloke,

    No mate you need help, the crash is starting to happen all around you and your to blind to see it!

    Wake up mate!

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