Investing what it tax can i claim

Hi
Just need a little help .
We have purchased an IP last year, and currently  putting around $200 pw towards it which covers mortgage, body corps rates and water, now i understand whatever we put towards it we can claim so much back at the end of the tax year but is it just a percentage of what we paid as i have read if you are in the 40 % tax bracket thats what you claim back but are some things not 100 % deductable, like rates, body corps water and just the mortgage based at 40 %, any advice on this would be great

thanks

it is not the mortgage but rather the interest charged. The net rental income or net loss is placed in your tax return.
So net loss = rental income - (interest charged + council rates paid + water rates + insurance paid + repairs + property manager fees+ borrowing costs over five years + depreciation)
Then if it is a net loss
your tax return is calculated as
Taxable income = normal  earned before tax  income  -  net property loss
if net property loss if a profit it will be added and you pay tax
Keeping in mind that you paid tax as you earned income from a wage based on normal earned income before tax
Your taxable income is reduced
so you get the loss back via saving the tax it would have been.
For example say your wage was $85,002 and your marginal tax rate was 40% then any thing over $75001 has 40% tax
so if the net loss was $10,000 you would lower the taxable income from $85002 to 75002 and would get back $10,000 * 40/100 = $4000 for the tax already paid when you earned the $85002 during the year in wage

http://www.ato.gov.au/individuals/content.asp?doc=/Content/00113233.htm

Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

Hi Duckster,
Just reading your post for Katies007 that is interesting because we are in the same boat and could I get in contact with you for further dicussion on that particular subject please.
Thanks karlm.

Karlm

Remember in addition to the cash deductions such as interest, rates and body corporate fees etc there are also non cash items you can claim which include Depreciation and Building Write off.

Have you arranged for a QS report to be done on the property ?

Is your current loan an interest only loan or a Principal & Interest loan ?
Are you claiming the shortfall anually in your Tax return or through your Pay coding by a variation to your salary.

All of these things need to be review to ensure that your IP is costing you as little as possible.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

Hi Duckster,
Thanks for the super quick response.
I only just a few minutes ago put that post there !!!!!!!!
Yes I have a depreciation report done.
The IP is an I/O loan.
My last accountant said it was not worth worrying about but the next accountant might think otherwise.
I work for the gov and my tax for that particular job is between $1000 - $1200 per fortnight.
I am looking for another  tax  accountant as my normal bloke lives at Peakhurst and I live at Gosford on the Central Coast someone local would be good if possible.
The 07/08 financial just passed we have payed out approx 20K.
That includes I/O repayments
                        Management fees
                        Rates and Water
                        Telephone
                        Repairs and Maintenance
                        Insurance
                        Etc
With that formular you posted earlier is that how it works with tax refunds.
I dont know if this IP is pos or neg, how is it worked out?
Thanks karlm

Thanks

Karlm

Without the actual figures it is difficult to summise whether it is is + or - but if you have had to pay out it sounds to me like it is -.

Dont you love those Accountants who tell you not to bother claiming anything in the QS report.

Did you claim all of your loan costs etc proportionalised over the loan term or 5 years ?

Sounds like you are missing a lot of deductions.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

Sounds like Katies007 needs to do some reading !

You shouldn't jump into investing or any other plan without first doing some research.

Good advise by posters. As stated its very hard to explain in a few words how negative gearing, tax matters etc work, that's what the text books are used for.

Hi Mate again,
What sort of figures and I will send them if you like !!!!!!!!!
That email at the bottom of your post is it alright to send you the info on that.!!!!!!!!!
Thanks karlm

Properyt Income and all property expenses and details from your QS report.

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 8.63%

Qld007

Hi Mate,
Just sent email with the info you asked for.
Any more info please dont hesitate to email please.

Thanks again
karlm