Australians have so many reasons to borrow and invest in real estate. Some invest in real estate because of the belief that property values do not really decline while others invest simply because they want to see and touch their investments.
Property investment becomes even more attractive because of the ability to offset the cost of property ownership and loan interest against assessable income.
Cash flow is very important to residential property investors. The return comes not only in the form of rent from the tenant but also even bigger in the form of negative gearing benefits.
Negative gearing is not much of an investment strategy, which aims to earn money. Negatively geared properties seek to cover loan costs or make a profit through capital growth when they are sold.
Interest on an investment loan for an income-producing purpose is fully deductible under negative gearing. Any shortfall is offset in a person’s taxable income, such as salary or rent from the property.
Small costs, maintenance and repairs are all fully deductible while property fixtures and fittings are considered plant, which allows for depreciation deductions.
Will ATO give you a refund for something you had not paid for?
Our answer is yes, when you claim depreciation. A property includes carpets, kitchen and stoves, fixtures, air-conditioning and other fittings, which can depreciate. New buildings are even entitled to claim depreciation of the actual building called “Building Allowance.”
What can you do?
If you would like to know more about negative gearing, you can click here to know more about Chan & Naylor services. You can leave your details here and we can schedule you for a free consultation. We’ll contact you to explain more.
Whether you are a beginner, seasoned investor or business owner, we can give you guidance to maximise the financial areas of your life. We can give you an integrated and tailored solution of your superannuation, taxation, property investment, asset protection, estate planning and more.
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Chan & Naylor Group has nationwide offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and South West Sydney, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.
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