Hi,
Ive just bought an investment property with my girlfriend. We are going to pay the loan back as interest only.
When you buy a property with someone else do you share the negative gearing aspect of the loan?. E.g. interest is $20,000, rent is $10,000 thus negative gearing aspect is $10,000. Does that just get split and both take $5,000 each as our negative gearing aspect of each of our salaries?.Thanks
I forgot to add, that because i work for the health department of WA i can salary package 100% of my income with investment loan interest. How would this work with holding a joint property with my girlfriend? So would we split the investment loan interest so if it was $20,000 i would get $10,000 i could salary package, and if so how would that affect her ability to negative gear her component of the interest?
Hold up ther howie, don’t salary package your interest on investment loan!!! The interest on investment loan is alreay tax deductible. The salary packaging is a bonus because of your employer! Use the salary packaging for other expenses eg, rent, credit card payments, home mortgage payments etc…but not for the interest on the investment loan, this is done separately. It is a huge benefit of being employed where you are!!!
This is based on my knowledge of salary packaging, but some employers have different rules so make sure you check this.
GSJ
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser
Howie
You havent mentioned how you purchased the property whether as Joint Tenants or Tenants in Common and if so what % each.
As GSJ mentiones don’t consider salary packaging your investment interest but for future purchases think of alternatives structures to purchase in. Purchasing in your personal names is not a good idea for many reasons.
Richard Taylor
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What i probably should have mentioned is this.
We can salary package up to $8755 threshold with a certain number of things such as credit card payments, rent, mortgage and other ‘easy’ things. Then from $8755 to 100% of your income there is another different set of items that can be slaraypacked for this amount, they are more obscure items and harder to claim, but investment loan interest is one of them. So i salary packge my credit card payments up to the $8755 amount, then the only other thing i can really package for the rest ($8755 to 100% of my income) is investment loan interest.
We purchased it as Joint TennantsAny comments?
Thanks
Items that can be packaged outside the threshold vary eg, meals, parking etc. The investment loan interest could be packaged if they allow it or it could just be done separately. I would probably do it separately to keep the end of year accounting simpler/less confusing.
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser
Whoever is on the highest marginal tax rate should salary package the interest and any other rental property expenses, as they will get the best benefit, then just the income is split. Otherwise the only benefit is to reduce your tax withheld from your pay.
Another salary packagin tip. Package a laptop, and use it 100% for managing the renatl property, then you get the salary package deduction and then depreciate the laptop at 40%. Effectively you may almost get the computer for nothing, depending on your tax rate and if you have kids.
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