All Topics / Help Needed! / Need help understanding tax

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  • Profile photo of deathluckydeathlucky
    Member
    @deathlucky
    Join Date: 2010
    Post Count: 1
    October 12, 2010 - 11:22 am

    I'm just wondering how tax deductions on my investment property work?
    I understand that i can claim loan interest, rates, insurance, and so on are they taken from my income or from my tax

    Eg

    Say i earn 100k from work and rent before tax and pay 20k loan interest, rates, and insurance lets say i pay 20% tax how would it work?

    100k-20k
    20% of 80k
    16k tax

    or

    20% of 100k
    20k – 20k
    0 tax

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    October 12, 2010 - 11:26 am

    In essence add your Gross rental income to your other PAYG income and then from this figure take off your deductible cash and non cash expenses.

    Tax is then paid on the reduced net figure. (Example 1 in your post).

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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