What is negative gearing in property investment?
Correct Answer
D) When a rental property's deductible costs exceed its rent, producing a tax loss.
Negative gearing occurs when the costs of owning an investment property (including loan interest, maintenance, and other expenses) exceed the rental income received, creating a tax-deductible loss that can offset other taxable income.
Why This Is the Correct Answer
Negative gearing describes a rental property whose deductible costs, such as interest, rates and depreciation, exceed its rent. The resulting loss reduces the investor's other taxable income.
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