Hey guys,
Im a bit confused about tax you need to pay on an investment property..
If a property is negatively geared is there any tax you need to pay ?
Or do you only pay tax on profit you make ? eg a positive gear property
At the moment I recive $8060 a year in rent, and have deductions of about $12000 a year..
Because im loseing $4000 a year do I have to pay any tax on the rental income ?
If your property is negatively geared, which means that your rent doesn't cover all the expenses related to the property, then there is no tax to be paid, and in fact you should get a tax refund againsyt your personal income tax.
Your accountant will work out the tax owing for you.
Have you had a Depreciation Schedule prepared for the property? This will give you deprecitaion deductions as well, which can increase your tax return quite a lot.
Discuss this with the accountant as well.
Hello Bez
There is nothing magical about rental income. It's just added to your other income and all deductions are subtracted.
Since you're losing $4000 on the property you will be saving yourself tax on this amount, at your top bracket, from your other income.
Hope this helps
ElkaL.A Aussie wrote:If your property is negatively geared, which means that your rent doesn't cover all the expenses related to the property, then there is no tax to be paid, and in fact you should get a tax refund againsyt your personal income tax.Your accountant will work out the tax owing for you.
Have you had a Depreciation Schedule prepared for the property? This will give you deprecitaion deductions as well, which can increase your tax return quite a lot.
Discuss this with the accountant as well.
Hi,
Im new to all this tax thingymajig, can you elaborate what a Depreciation Schedule is please? and where would i obtain one?
I do my taxes myself and i would like to expand my knowledge and make my dollar go further!
Thanks!With depreciation the ATO allows your to claim a pecentage of the decline in value of your property construction costs and fixtures and fittings. eg. If your house cost $100,000 to build, you may be able to claim $2500 pa for 40 years. Carpets costing $1000 could be claimed at 20% per year for 5 years etc. It all adds up and saves you tax. These are called no-cash deductions as you do not need to have spent the money to claim the deductions each year.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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