Property investment offers several tax advantages that can significantly improve your returns. Here's a plain-language breakdown.
Negative Gearing
If your investment property costs more to own than it earns in rent, the loss can be deducted from your taxable income. For example:
•Rental income: $25,000/year
•Loan interest + expenses: $35,000/year
•Tax deduction: $10,000
This $10,000 loss reduces your taxable income, lowering your tax bill.
Depreciation
You can claim depreciation on the building itself and on fixtures (carpet, appliances, blinds). A quantity surveyor's report typically costs $500–$700 and can identify $5,000–$15,000+ in annual deductions.
Deductible Expenses
Common deductions for investment property owners include:
•Loan interest
•Property management fees
•Council rates and water charges
•Insurance premiums
•Repairs and maintenance
•Advertising for tenants
•Travel to inspect the property (in some cases)
Capital Gains Tax (CGT) Discount
If you hold the property for more than 12 months, you're eligible for a 50% CGT discount when you sell. For example, if you make a $200,000 capital gain, you only pay tax on $100,000.
Important Note
Tax laws are complex and change frequently. Always consult a qualified tax professional for advice specific to your situation. This article is general information only.
How a Broker Can Help
A licensed mortgage broker experienced in investment lending can structure your loans to support your tax strategy while keeping your overall portfolio healthy. Request a broker introduction through Mazal Mortgages to discuss your investment plans.