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VIDEO · 06 OCTOBER 2022

It Depends – When is a negative gearing trust structure appropriate?

Cooper Grace Ward
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Discusses a negative gearing trust structure - what they are and when they are appropriate.

AustraliaCorporate/Commercial Law
Steven Cawood
Steven Cawood
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In this edition of 'It depends', graduate Steven Cawood talks about negative gearing trust structures and, in particular, what they are and when they're appropriate.

Video Transcript

Welcome to this instalment of it Depends. Today I'll be talking about a negative gearing trust structure and in particular what they are and when they're appropriate.|

What is negative gearing?

Negative gearing occurs when a loan is taken out to purchase an income producing asset most commonly a property. However, it produces insufficient income to cover its costs such as interest on the loan or the loan repayments. The effect of this for the individual or the entity which holds the asset is that the loss can reduce their assessable income and therefore may result in a tax benefit. Whilst initially this means they may sustain some losses it can be an effective investment strategy for assets that increase in value over time.

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