-3.5% negative gearing - choose a neutrally or even geared property and this is 0%, heck with some depreciation you can even get some money back. +1% tax effect of the above. See previous point -5% capital loss. Mmm plenty of property not dropping by that much per annum, plus it is only relevant if you want to sell over the short term. -3% inflation loss. True but relatively speaking since it is on borrowed money the owner is actually better off due to inflation so that loss is actually more of a gain of 3% --------- -10.5% total loss - So real total loss is probably closer to 2%.
Cash 5% positive gearing - Assuming you can get that much with todays current rates. -1.5% tax effect of the above 0% capital loss -3% inflation loss ---------- 0.5% gain
Yep I know which one I would choose as well - the property as the rents will be increasing making the property more positively geared over time and we are certainly not going to have constant 5% capital losses continuously.
