Negative Gearing – it’s not to your benefit!Written by Naomi Warne
The concept of negative gearing has been originally developed to encourage real estate investment in Australia by allowing any income losses from property investment to be deductible from other income as a tax benefit. This means that taxable income of owner will be reduced after deduction and therefore total tax payable is also reduced. In view of fact that many of profits from property investments are usually obtained as a capital gains at time when property is sold, but do not generate positive cash flow from rentals during course of holding period, negative gearing therefore came in to address this issue. You lose either way However, flaw with negative gearing lies in its concept as well. If an investment generates a positive cash flow, increased income will make investor liable to pay more taxes as well. In end, investor loses either way. If he makes money from positive cash flow, he has to pay part of it off in taxes, while negative cash flow will take money out of his pocket. Therefore, with a negative geared property, it is not possible to get a positive cash flow and pay less tax at same time. No guarantees on property value appreciation Investors who are encouraged to put their money into negative geared property should think twice. As these properties are expected to generate profits only through capital gains, value in capital gains should then be greater than total losses incurred over course of holding period. However, there is no guarantee that value of property will appreciate, or at least appreciate enough to cover your losses. Also, you can’t possibly use your expected future profits now as it is not been realized yet.
| | Managing Your Home Based Online Business - 1Written by Roy Thomsitt
Working at home in their own business is something millions of people strive for and dream of, but most in Western world never actually get around to doing it. For those who do achieve it, how do they adapt if they have changed, for example, from an office environment, where they were employed, had a strict routine imposed on them, and were told what to do all time by those above them in company?How do you manage working alone from home? Now, that is not "manage" in "how do you get by?" sense. It is manage in manager/staff sense. You work at home alone, you are boss of your home based business. So who or what is there to "manage"? The profitability of any business, sole proprietor or multinational, depends on successful management of a number of omnipresent departments: marketing, finance, human resources, computing, purchasing, and, if appropriate, research and development, and production. If you are working at home, alone, online, you have all those management responsibilities and functions rolled into one. Your management task is perhaps most difficult of all. You have to manage yourself. If you have never thought about it like that, then I suggest you consider it for a while. To run a successful business, you need to have a grasp of all elements of that business, and how they interlink. That is as true with a home based online business as it is with a large corporation. Managing all those different elements of business, I think you will find, is not as easy as it may sound. Managing yourself is definitely not as easy as it may sound. Working at home for many can mean an escape from managers above them who may have made their lives a misery, or at least less satisfying, for all of their previous career. But does working at home mean an escape from management altogether? No, it does not. At least, if you want a more profitable home based business, then management will be every bit as important as before. In fact, more important. Why more important? Now it is your business. If you had shares in a company, would you not want good management to increase profits and thus your dividend and capital? Of course you would. You are not earning profits for others, unless you have family responsibilities. Okay, you will pay taxes, but that's not your biggest concern when you get started. You just want to get started and make some profits.
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