gday all! It’s been a while since ive dropped a line as i have been in east timor. But now that i’m back i’m ready to get back into the game!
Now while i was away, one of my investor friends run an idea relating to tax breaks past me and it sounded to good to be true so I thought i would put it the panel of experts! Now bear with me while i fumble my way through this!
If I make a salary of about $40 000 on which i pay tax of about $11000, and i have ten houses, each with $10 000 rental income annualy, I now have a gross income of $140 00 [$40 000 + 10x $10 000].
If my ‘expenses’ come to $15 000 per house my total expenses are now $150 000.
Deducting expenses from my gross income now gives me a total salary of NEGATIVE $10 000. [at least in the eyes of the tax man]
Now heres the big question. Do I get the whole lot of expenses back [$150 000] as they are income related or do I only get the $11 000 tax payed from my salary?
God i hope it’s the lot! [suave2]$$financial freedom by 30$$
You would have a taxable income of $0, in fact you would be making a loss. I hope you have the funds to cover the $150K worth of expenses.
So you will get a tax refund of all the tax you would have paid. Not really all that much considering an income of $40K.
You certainly don’t get a refund of everything you spent.
I think you have a bit of self education to do before you buy any properties.
Plus you better start discussing investment plans with someone more experienced than your mate.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
What would be a better way would be to try and have a couple of income producing properties ie positive geared and then offset the loss properties against them as well as your salary.
. The term is net rental loss or income.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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