Negative Gearing in a SMSF

Hi, I’m Grant Abbott. I’m principal of SMSF Strategies and also chairman of the Australian SMSF Member’s Association. Today I want to talk to you about property, but I want to talk about negative gearing. Now most of you think you know negative gearing really well.

Here’s the deal; what we’re going to do is offset contributions tax. You see when you salary sacrifice from your employer, or if you’re a small business owner, you put money into super and get a tax deduction outside, that money goes inside the fund, and there’s no such thing as contributions tax that goes inside the fund, is assessable income. That assessable income can then be reduced by those negative gearing deductions. That means we don’t pay 15% tax on our contributions, we may in fact pay 5%. Whereas if we’ve got enough negative gearing, we can even go down further; get an (01:43) property, you won’t have any contributions tax at all.

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