{"id":14888,"date":"2017-12-06T01:00:09","date_gmt":"2017-12-05T14:00:09","guid":{"rendered":"http:\/\/www.realestatetalk.com.au\/?p=14888"},"modified":"2017-12-06T01:00:09","modified_gmt":"2017-12-05T14:00:09","slug":"too-much-fuss-about-negative-gearing-ian-rodrigues","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/too-much-fuss-about-negative-gearing-ian-rodrigues\/","title":{"rendered":"Too much fuss about negative gearing \u2013 Ian Rodrigues"},"content":{"rendered":"<p>Carmel has posed an interesting question about negative gearing. She cannot understand what all the fuss is about and <strong>Ian Rodrigues<\/strong> tends to agree with her.<br \/>\n<strong>Transcript:<\/strong><br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>We welcome into the show Ian Rodrigues. Ian is from BishopCollins.com.au.<br \/>\nFirstly, hello and welcome to the show, Ian. Nice to be talking with you again.<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>\u00a0Yes, always good to be here, Kevin.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Ian, I\u2019ve had a question from Carmel Taylor. You and I have talked about this off air; we\u2019ve had several discussions about it. I\u2019ll quickly read it.<br \/>\nCarmel writes: \u201cI\u2019m struggling to see the benefits of negative gearing and I\u2019m wondering what all the fuss is about. Would someone please explain why it even exists? It does not make sense to be losing money on an investment.\u201d<br \/>\nCarmel, you raise a few very good interesting points there, and I know that Ian will be champing at the bit to talk about this one.<br \/>\nIan, what would be your comments initially to Carmel?<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>\u00a0I\u2019m in total agreement with Carmel. Negative gearing is one of those things that is a pet topic of mine that people misunderstand and then it gets a bad rap and people think there\u2019s something wrong with gearing overall.<br \/>\nThe first point I\u2019d make to Carmel is gearing to buy property \u2013 which means borrowing some money to buy a quality investment asset \u2013 there is absolutely nothing wrong with borrowing money to buy a quality investment.<br \/>\nTwo things, one is you\u2019re borrowing money, so you\u2019re using the bank\u2019s money to magnify your investment return, and you\u2019re buying a quality investment asset. They\u2019re the two key things that I like about gearing.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>That process you just talked about, that is gearing.<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>\u00a0Gearing full stop; we haven\u2019t talked about negative gearing yet.<br \/>\nNegative gearing is a point in the investment cycle where you\u2019re outgoings exceed your incomings and you\u2019re making a loss \u2013 either a cash flow loss or a tax paper loss \u2013 and getting some tax benefits back in those early years.<br \/>\nBut the point I\u2019d make is if you\u2019re going to be negative geared forever on an asset, you probably have a pretty poor investment because at some point that asset should become positively geared, where the income is greater than the outgoings, particularly from a cash flow point of view.<br \/>\nA tax loss is another thing; that\u2019s a benefit you can get. But to me, if your investment is not going to ever be positively geared from a cash flow point of view, you are hoping for or backing yourself that you\u2019ve picked an asset with incredible capital growth to make up that.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>There\u2019s enough data and information to allow you to be able to assess how long it\u2019s going to take for you to turn it around from being negatively geared to be either neutrally or positively geared, isn\u2019t there?<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>I think there is. The thing about it is there\u2019s enough data to say \u201cThis is what I\u2019d expect to happen with capital growth and where it will head,\u201d but I think you could be the best in the business but no one has a crystal ball to predict how markets and investment values will move in the future. Anyone who tells you they can do that on a share market or property market, no one can guarantee it because it\u2019s not guaranteeable; it is subject to future things that may or may not happen.<br \/>\nI still think you can make a pretty good investment decision, notwithstanding that, but it can never be guaranteed. So, the income is more known, what you can rent property for is more known because you have a lease agreement and money comes in each week or month. But capital growth is predictable but not as certain.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>When someone comes to you and says, \u201cIan, I want to develop a strategy, and I\u2019m interested in talking to you about negative gearing,\u201d what would be the first comment you\u2019d make to them?<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>Usually, they\u2019re looking at it from a tax savings today point of view, and when you look at the investment, they will get some tax savings for the first couple of years, which is great. They get a refund from the tax office, and money back from the tax office has a special character to it, I think. People value that more.<br \/>\nBut ultimately, you need to plan for when that asset is going to become positively geared and when you\u2019re going to sell it and make this capital gain, as well. If it doesn\u2019t make that\u2026 The point is I think saving some tax is a good thing in the short run, but I want to be paying lots and lots of tax, which is a funny thing for an accountant to say, isn\u2019t it? Because if you are, you must be making lots and lots of income or capital gains.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Quite often, I\u2019ve been to an accountant at the end of the financial year and he said to me, \u201cOh, you\u2019ve made all of this money,\u201d but there\u2019s nothing in the bank account. That\u2019s always fascinated me, Ian.<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>Yes, profit and cash flow don\u2019t often match up. But there are plenty of things you can do to minimize tax and that\u2019s what we\u2019re advising our clients on. As I\u2019ve said many times, you can have the same economic transaction in different tax structures and have an outcome that\u2019s 50% tax or no tax.<br \/>\nYou do need to get advice about structure, but don\u2019t get carried away with negative gearing being this tax saving bias for your decision. You still need to buy quality investments and you still need to structure it right, and it should be positively geared eventually.<br \/>\n<strong>Kevin:\u00a0\u00a0<\/strong>Well said, Ian. Thank you very much for your time. Ian Rodrigues is from Bishop Collins Group, and you can reach them at their website, BishopCollins.com.au.<br \/>\nIan, thanks for your time.<br \/>\n<strong>Ian:\u00a0\u00a0<\/strong>Great, Kevin. All the best.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Carmel has posed an interesting question about negative gearing. She cannot understand what all the fuss is about and Ian Rodrigues tends to agree with her. Transcript: Kevin:\u00a0\u00a0We welcome into the show Ian Rodrigues. Ian is from BishopCollins.com.au. Firstly, hello and welcome to the show,&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":14890,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,36,22,25],"tags":[103],"class_list":["post-14888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcasts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Too much fuss about negative gearing \u2013 Ian Rodrigues - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/too-much-fuss-about-negative-gearing-ian-rodrigues\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Too much fuss about negative gearing \u2013 Ian Rodrigues - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Carmel has posed an interesting question about negative gearing. She cannot understand what all the fuss is about and Ian Rodrigues tends to agree with her. Transcript: Kevin:\u00a0\u00a0We welcome into the show Ian Rodrigues. Ian is from BishopCollins.com.au. Firstly, hello and welcome to the show,...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/too-much-fuss-about-negative-gearing-ian-rodrigues\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2017-12-05T14:00:09+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"Too much fuss about negative gearing \u2013 Ian Rodrigues\",\"datePublished\":\"2017-12-05T14:00:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/\"},\"wordCount\":1052,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"keywords\":[\"podcasts\"],\"articleSection\":[\"Finance\",\"Kevin Turner\",\"Kevin's Update\",\"Latest Stories\",\"Property Investment\",\"Research\",\"Sponsored Channels\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/\",\"name\":\"Too much fuss about negative gearing \u2013 Ian Rodrigues - Realty Talk\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"datePublished\":\"2017-12-05T14:00:09+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#primaryimage\",\"url\":\"\",\"contentUrl\":\"\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/too-much-fuss-about-negative-gearing-ian-rodrigues\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Too much fuss about negative gearing \u2013 Ian Rodrigues\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#website\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/\",\"name\":\"Realty Talk\",\"description\":\"Your Trusted Voice For Property Investing. 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