This glossary is a work in progress, and will be built upon as I come across terms that novice investors may not be familiar with. Let me know if there is anything missing that you feel should be added.
Capital Gain
The profit gained from the sale of an investment. In real estate investing terms, this can be described (simplistically) as the difference between the purchase price and the current value or sale price of a property
Depreciation
The reduction in value of an asset over its effective life. Since some assets in a property become less valuable over time (for example carpet will wear out and need to be replaced), from a tax perspective you are able to claim this as depreciation. This effectively increases your costs for holding a property, and so can affect your tax position. Talk to your accountant in regard to getting the most benefit from this, and look at getting a depreciation schedule from a valuer.
Negative Gearing
A variation on the buy and hold strategy where the income from the property is less than the cost of holding the property. The loss is currently (in Australia) able to be claimed as a loss for taxation purposes, and offsets the income the owner is earning from other sources (eg a job). The strategy has been quite popular as a wealth development strategy, but you should be wary of using this, as there is no guarantee that negative gearing benefits will continue to be offered in future government budgets.
Positive Cashflow
A investment property where the cost of holding the property is less than the income generated by the property. The result of this being more money in the pocket of the owner.