Negative Gearing.

Investing in property remains a popular way to generate an income for individuals all over the world, and thanks to increased globalisation you can even invest in one country while living thousands of kilometres away.

If you’re one of many considering investing in Australian property from abroad (Singapore, Hong Kong, London or USA as an Australian expatriate) and would like to use negative gearing as part of your investment strategy, you might be surprised to learn that you face similar challenges to those faced by Australian investors. It’s why it’s so important to understand the risks of this tax tool thoroughly before proceeding and to get professional assistance to guide you through it.

Firstly, if you want to negatively gear an investment property, you need to be prepared to be in it for the long haul. There will be a time period where your investment incurs costs without giving immediate returns and you will need to have a steady income stream to afford this.

Negative gearing is also strongly affected by local interest rate fluctuations, meaning that any dramatic increase in Australia’s interest rates could impact the affordability of your investment. This doesn’t mean that you should not pursue an Australian property investment loan at all, but rather that you should make sure to take steps to mitigate your risk and have provisions in place to keep your mortgage payments up should a future shortfall occur.

Picking the right location can dramatically improve your negative gearing outcomes. For instance, we’ve found that properties in the Sunshine Coast and Caloundra area are optimised for foreign property investment as they are predicted to steadily increase in value over a long time period.

When working with our team at Smart Loan, you can expect to be assisted with every aspect of negative gearing, whether this is your first investment or you’re expanding on your existing portfolio. As we’re based in both Australia and Singapore, we are uniquely poised to give you a face-to-face consultation while having a presence in Australia to monitor, manage and maintain all your investments. This means that no matter what local changes occur we can help you maintain your interests from abroad.