I heard somewhere that interest on an IP loan is tax deductible. Could someone explain this in a bit more detail. how does it work if you have a negative geared property?
Mike,
Well in a nutshell, all the expenses of owning the property inc interest are tax deductable.
The rent you receive is taxed.
Basically if it makes a profit then you pay tax on that profit and if you make a loss then it is deductable.
This has been simplified a lot but I guess it answers your question.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Yup ur rite
interest on an IP is tax deductable, so is pretty much all other expenses, in terms of maintenence and upkeep. travelling, phone calls, stationary, agent management fees, insurance, advertising… whatever comes out of your pocket is tax deductable, but i think larger items like the replacement of part of a fence, or a Hot water service are broken down into yearly installments over a few years.. this includes stamp duty (cant remember if its the loan or the purchase stamp duty) thats also deductable over a few years….
get a free booklet from the ATO sent to you, speak to an accountant
thats why interest only loans are available i guess,,, interest on investments is commonly referred to as “good debt”
All the best
Jason
Stamp duty on loans is deductable (generally) over 5 years.
Stamp duty on purchase on property is not tax deductable, rather it forms part of the cost base of your asset (for CGT purposes).
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