To quote the late great Kerry Francis Bullmore Packer
“Now of course I am minimizing my tax and if anybody in this country doesn’t minimize their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra”
Kerry Francis Bullmore Packer
I love it, and whilst you might not agree with how the government is going, everyone will probably agree that we all want to pay less tax……
But if at the same time you could also retire with an investment property or 2 (or 3 or more ) to supplement your Superannuation?
“You can do it” – There are only a few countries in the world that have a tax system that supports exactly these ideas, and my Aussie readers happen to live in one of those lucky countries.
Yes, the Australian Government rewards you with many tax benefits to assist you to own investment property.
These tax benefits can be reviewed in 2 categories:
1. Negative Gearing
2. Tax Deductions on Investment Property
Let’s look at what that magical phrase “Negative Gearing” actually means. (Yes, you know that you are dealing with a passionate Mortgage Broker, when he or she gets starry eyed over the term “Negative Gearing”); and then let’s look at the actual Tax Deductions that you can make on your Investment Property.
1. Negative Gearing – what is it?
Essentially, negative gearing means if you income from a property, i.e. rent is less than you expenses, i.e. interest, depreciation and so forth, you create an income loss incurred on a real estate investment against which is applied to reduce against another form of income – i.e. wages! This effectively reduces the tax that you pay on your other income. So our terrific ATO office assists you with tax benefits which help you to own or indeed build your investment property portfolio.
Your ultimate aim would be for your rental income to exceed all costs and therefore to have “positively geared” property investments. And just so you know this should be achieved with the right investment property in 3 – 5 years.
But in the meantime, why not let the ATO assist you to own investment property?
2. Tax Deductions – how can I reduce my income tax payments?
Most Australians buy investment property so that they will eventually be able to reap the benefits of Australia’s unstoppable long term capital growth in property. But in the meantime, you are able to claim on just about every cost associated with your investment property purchase and maintenance. These include: interest paid on the loan, repairs and maintenance, rates and taxes, insurance, agent’s fees, travel to and from the property to facilitate repairs, and buildings depreciation. These deductions are claimed against your regular income tax and create a means for you to utilise the benefits of “Negative Gearing”
If you would like to go into the finer details of minimising tax with me, please give me a call! Yes, I do get starry eyed about Negative Gearing because it is just so good for you!
