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An interesting article in the October issue of the KPI magazine by Margaret Lomas.. No I don't sell the magazine and no I'm not an avid supporter of Richmastery.... Education is education where ever you get it from.
I think if you borrow a copy from some body and turn to page 43 you will be enlightened.
She outlines the difference between positive gearing and positive cash flow and I quote
" The main problem with this rule is that few people, even those who proclaim themselves experts, truly know what positive cash flow property is. Positive cash flow is not about finding property where the rent return is greater than the expenses. this is positive gearing and wile it is preferential to purchasing negatively geared properties (where there is a shortfall between income and expenses), It may not provide as great an opportunity for leveraging (due to the often low growth of positively geared property) as true positive cash flow property can.
Positive cash flow is where you, the investor, has learned enough about the tax law toknowthat in New Zealand you may make a range of depreciation claims on your tax return which serve to create a loss which is on paper only. These on paper claims give you back some of the tax you have paid on your income,
etc etc."
So I read from that that once the tax deductions for depreciation has been taken out if you recieve a return that's positive cash flow.
Well that was fun. Hope it helps....
Counter cyclic means always swimming against the tide
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