RENTAL & INVESTMENT PROPERTIES
Gary Wilkins & Associates provides expert tax advice for rental and investment properties. We can explain negative and positive gearing and show how those investment property purchases will impact your tax return.
Our team of tax accountants in Cairns will advise you on how to lodge a variation with the ATO. This can reduce the amount of tax you pay to your employer for personal income tax to offset negative gearing.
We can also discuss with you what happens when you live in a property that becomes an investment.Our tax agents will explain how that will change your financial return. In addition, we can advise how to put a property in your name, a partner’s name or a trust fund, and the benefits of each.
All these situations affect your taxes differently, which is why you need clear advice and guidance from professionals.
Let’s take a look at the tax advantages of having an investment property.
Depreciation
Lowering the property value can be a tax advantage and may be enough to turn a negatively geared property into a positively geared one once you receive your tax refund.
Capital Gains
The capital gains tax exemptions typically only refer to your principal home but that’s not always the case. This can’t be applied to more than one property at a time. When it comes time to sell the property, you be exempt from capital gains tax.
Essentially, if you have made money from your principal place of residence, you may not be eligible for a full CGT exemption. This is typically from income such as renting out a room or running a profitable business from it. However, if you do rent out a room or run a business, you may be able to claim some tax deductions.
Negative Gearing
Any money lost on the investment property can be claimed against tax paid on your other investments. This could be due to repairs and maintenance, borrowing expenses, land tax or other costs incurred in the financial year. You can claim a tax deduction for incurring a loss from investing borrowed money.
Interest on Mortgage
You can claim interest on a home loan if you rent the property out. For tax purposes, it’s a cost incurred while earning a profit on the property, which makes it tax-deductible. Having an interest-only loan is not necessarily the best way to maximise tax deductions though. Any excess cash flow coming from your property should pay down your non-tax-deductible debt first to help you become free from the debt faster.
Equity Loan Withdrawals
There’s no tax paid on money withdrawn from an equity loan. If the rental property rises in value or you have paid a substantial amount down, this increases your equity. It is then possible to access some of the money by borrowing on that equity.
There are many rules and regulations regarding rental and investment properties and it’s best to talk to a qualified accountant to ensure you receive the best advice available. Our specialists can arrange an in-depth consultation with you to discuss your particular financial situation and your goals for investing in property.
Make an appointment today with one of our team.