Surfers Paradise 
Owning an investment property offers numerous tax advantages, even if it’s not immediately profitable. Here are six key tax benefits every investor should know:
- Negative Gearing When rental income is less than property expenses, the property is negatively geared. This creates a loss that can be claimed as a tax deduction, reducing your taxable income and thereby lowering your tax bill.
- Capital Gains Tax (CGT) Exemptions When you sell a property, you might incur CGT on the profit. However, if you’ve owned the property for more than twelve months, you can claim a 50% CGT discount. Primary residences are usually exempt from CGT, and there are partial exemptions for properties used for income-producing purposes.
- Claiming Interest on Your Mortgage You can claim the interest on your investment property loan as a tax deduction, provided the property is used to generate income. This does not apply to owner-occupied properties.
- Equity Loan Withdrawals are Tax-Free If your property appreciates in value, you can take out an equity loan without incurring taxes on the withdrawal. This strategy allows you to use the equity for other investments without selling the property and triggering a capital gain.
- Small Expenses Deductible expenses such as land tax, strata fees, council rates, insurance, legal fees, and bookkeeping costs can add up. Repairs and maintenance costs directly related to wear and tear can also be claimed immediately.
- Depreciation As properties age, their structure and assets depreciate. You can claim this depreciation as a tax deduction, which reduces your taxable income. There are two types of depreciation: Capital works deductions for structural elements and plant and equipment depreciation for removable items.
For more information on maximising tax benefits from investment properties and to start your journey as a landlord, contact our Property Investment Managers today.
Disclaimer: This advice is general in nature and should not be considered as personal financial advice. Before making any financial decisions, it’s important to seek advice from a qualified financial advisor.
Source: BMT Tax Depreciation
