Possible to pay off IP’s before tax on income

Hi Coasta

The terms of interest to you will be as follows:

"Negative gearing" .  Think of it like this: an investment property earns income (ie the rent).  But it has costs (loan interest, insurance, council rates etc).  If, overall, the investment property makes a loss, some of the losses can be recouped on your tax return by means of clawing back tax already paid on your day job.  You won't get losses back dollar for dollar, but you can get some back.  Take a look on google for "negative gearing" to read up on the topic.

The other term is "depreciation".  Everything in a house or dwelling ages with time.  In other words, it depreciates.  A surveyor can put together a depreciation schedule to include all relevant items from the structure itself to the carpets etc.  You are entitled to a tax deduction as per the depreciation schedule.

If it is known that your investment property will make a loss, it is possible to get your accountant to help you put together a case to submit to the ATO, who in turn can provide a letter for your employer asking they deduct less tax from your pay each week.  That way you don't have to wait till the end of the financial year for your refund.  You need to be careful with this, and have spare cash in the kitty in case the calcs turn out to be a bit out.