Rental Properties & Negative Gearing
To assist landlords in reducing the audit risk associated with claiming rental property expense deductions, we can help with checklists and advice that helps with most residential rental property expenses, and whether these expenses are generally deductible/non-deductible. Deductions are only available to the extent to which a property is either rented to tenants or genuinely available for rent (i.e., where active and bona fide efforts are made to let the property).
Come in for a consultation and we can also arrange an easy to understand example and analysis of your future purchase. We'll explains how negative gearing works and addresses the key issues when purchasing a property, including:
- Alternative Ownership Structures and their Tax Consequences
- The Importance of Capital Growth
- The A-Z of What is Tax Deductible
- The Treatment of Establishment Costs
- The Steps to Buying a Negatively Geared Property
- The Risks, Finance Options and Depreciation Write Off
- The Mechanics of the Capital Gains Tax
- Record Keeping Requirements
A rental property is negatively geared when it is purchased with the assistance of borrowed funds and its expenses exceed the rental income and a loss is incurred. Losses incurred can then be offset against other assessable income (e.g. salary, wages or business income) - this enables either a reduction in tax payable or a larger tax refund. The largest part of the deduction is the interest portion of the mortgage. You can, however, claim Property Management fees, rates, loan costs and maintenance and repairs.
Negative gearing deductions are most beneficial to people in high income brackets where they are in the high marginal tax rate. This allows larger deductions when you borrow bigger amounts as you will pay more interest which is 100% tax deductible.
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