Mortgage Reduction, Tax Deduction, and Gearing a Property is still a Winner for Serious Investor

Mortgage Reduction, Tax Deduction, and Gearing a Property is still a Winner for Serious Investors   

For so many years now Mortgage Reduction has been achieved combined with the process Negative Gearing on property;  And over a number of years multiplying that one property is to an entire Portfolio, this is not due to good luck, this is good management and good skills.   

Gearing is when you borrow money to invest with the potential to accumulate wealth faster than if you were solely using your own funds to invest, or sitting back twiddling your thumbs on a 25 year mortgage.   

There are three types of Gearing, Negative, Positive and Neutral, which have the benefits to reach your financial goals faster, give you long- term returns on growth assets, allow you greater investment diversification, with the added bonus of your interest being paid on your borrowings being tax deductible.    

The principal objective when considering gearing should be wealth creation, not tax reduction but the two exist side by side and help you achieve maximum benefits with long term goals reachable.  It is important that you have substantial and existing equity and a regular, secure income stream for these factor to be able to work efficiently.     

The flexibility with a line of credit loan means you are able pay off part of your loan and redraw funds at a later date, provided there is enough security for your loan as you enjoy a choice of fixed and variable rate loans or a combination of both.   The income you receive from your investment property helps you to invest again in the building of your property portfolio or to reduce your loan balance and reduce your mortgage.    

Gearing is also an effective taxation strategy because if you decide to gear for investment purposes, you are able to claim the interest expense as a tax deduction.  The interest expense tax deduction can be applied against your investment earning and other taxable income earned during the year, such as your salary.   

All of the above is nothing new, these procedures and process has been in place for many years and yet so many investors are simply getting lame advice from their existing accountants and so called financial advisers.     

I am not an expert when it comes to the intricate details that go into putting all of this in place, that's why I surround myself with people who are.