Gearing and taxation

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To optimise profits from your investment property, it's important to understand the potential tax benefits available.

Gearing

Gearing is the term used to describe borrowing for investment purposes.

Positively geared means the rental income of a property exceeds the costs of owning it (i.e. the bank interest and fees, property and maintenance costs).

Negatively geared means the costs of owning a property exceeds the income it generates.

Negative gearing an investment property may be beneficial as an investor. The $700 per month shortfall as shown below could potentially be used as a tax deduction against other sources such as your salary or wages income.

Example of negatively gearing your property

Rental income on investment property	$1,500 per month
Less
Loan interest	($2,000) per month
Council rates	($200) per month
Shortfall	$700 per month

Talk to a Westpac Home Loan Expert on 131 900 for more details.

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The taxation position described is a general statement and should only be used as a guide. It does not consitute tax advice and is based on current tax laws and their interpretation.