Investors need income in the long run: Smartline
Investors should focus on the income derived from property rather than capital growth and steer clear of long-term negative gearing strategies, according to Smartline Personal Mortgage Advisers.
Smartline executive director Joe Sirianni said although many people thought negative gearing could be tempered by capital growth, it was not a good strategy for the future.
He said the strategy rarely worked for those on a lower income due to the tax considerations. An investor on the highest marginal tax rate got back 45 cents per $1 spent on negatively gearing property, whilst those on the lowest marginal rate got 19 cents per $1, according to Sirianni.
As property is a long-term investment, investors should focus on income rather than capital growth as it has the most benefit in the long run, he said.
"Even if you get growth, that growth is really just making up for your losses, you're not actually really moving forward. It's the surplus income over time - by having regular rent increases - that is going to make the difference," he said.
Negative gearing should be used as a short- to -medium term strategy to get into property investment rather than a long-term strategy, according to Smartline, who said investors should only negatively gear for five to seven years.
Sirianni said the longer an investor is negatively geared, the longer they will pay more out of their pocket than recoup from the property. He said investing should be viewed in the same way as a business.
"While it might be manageable to run at a loss for a short period of time as you establish and grow the business, it's not sustainable in the long term," he said.
Investors should seek taxation advice from their accountants, but a good mortgage adviser should be able to give an indication of the long-term cash flow of an investment property, according to Sirianni.
Recommended for you
The merger with L1 Capital will “inject new life” into Platinum, Morningstar believes, but is unlikely to boost Platinum’s declining funds under management.
More than half of the top 20 most popular shares bought by advised investors during the first half of 2025 were ETFs, according to AUSIEX data.
At least two-thirds of ETF flows are understood to be driven by intermediaries, according to Global X, as net flows into Australian ETFs spike 97 per cent in the first half of 2025.
Inflows for the first half of 2025 for GQG Partners stand at US$8 billion, but the firm has flagged fund underperformance could be a headwind for future flows.
