Considering the true cost of negative gearing
When calculating the breakeven point of an investment it pays to consider the full impact of negative gearing over the life of your investment.
Those with negatively geared property need to factor in the opportunity cost associated with losing money over a period of time when calculating the breakeven point of their investment.
According to Smartline Personal Mortgage Advisers, understanding the real impact of negative gearing costs reinforces the argument that it’s generally best used as a short to medium-term investment strategy.
“Many people overlook this opportunity cost because they fail to look at their investing as a business,” Smartline Adviser’s Sam Ghoreyshi says.
“While no-one would run a business for 10 years at a loss, it’s not unusual to see people negatively gear a property for that long.
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