Apologies if I have posted this in the wrong forum – I am new here and this is my first post!
My husband and I have just finished building our first investment property. As this is all new to us I was wondering if someone could give us a rough indication of the potential tax benefits (i.e different tax bracket etc). I am more than happy to supply information that may be required. We have a fantastic accountant but I just want to know what we might be able to expect come tax time.
Our home last valued 6 weeks ago at $550k – mortgage is $350k
IP valued at $500K – IO mortgage $500kHave advertised through agent at $470 p/w (we have included lawn maintenance in this). Agent is charging 12% for property managing etc..
Our repayments on IP a month are $3k so once rent is deducted we will be adding back in $1350k a month.
We are getting a quantity surveyor this week to do a depreciation schedule. The loan is in both of our names but 70% in husbands and 30% in mine.
My husband earns $160k p/a. I think he is in the top tax bracket? I earn considerably less $21k.
The house is brand new – stone benchtops/gas log fire etc..
Again if you need more details let me know..
You can't claim repayments you can add interest charged and 5 years worth of borrowing costs to expenses.
http://www.ato.gov.au/individuals/content.asp?doc=/content/00113233.htm
http://www.ato.gov.au/individuals/content.asp?doc=/content/00113245.htm
You can also add council rates, water rates, insurance – agents fee as expenses
can add 2.5% of building costs of new dwelling to expenses for each year for 40 years but it does increase capital gains tax if you sell later.
http://www.ato.gov.au/individuals/content.asp?doc=/content/00131327.htm
http://www.ato.gov.au/individuals/content.asp?doc=/content/00183243.htm
Net Profit or Loss = rent income – expenses incurredtax rates can be found from our very helpful tax office web site see link below
http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htm
Also the ATO has a guide for new landlords
that can be downloaded
http://www.ato.gov.au/individuals/content.asp?doc=/content/00237831.htmHope you find the links useful
You might find other interesting stuff in the ATO website as it is a very helpful resource.Is the ownership of the property also in 30% and 70% proportions as tenants in common
or 50% ownership as joint ownership
http://www.ato.gov.au/individuals/content.asp?doc=/content/00237831.htm&page=5&H5
Rental income and expenses incurred on actual house needs to divided by ownership ratio of property.
I am not sure on how the split in loan ratio affects this your accountant needs to be asked if this splits the interest costs to each of you as 70% and 30% or is it based on property ownership ratio instead.
12% agents fee !!!!!!! wow what state are you in ?? that seems really steep to me. ours charges 6% (melbourne SE suburbs) I would be trying to negotiage a better deal!! otherwise goodluck with everything and well done for taking the first step with your first IP!!!
Must be WA – they are high over there.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes – you are correct it's WA. 6% would be sweet!
Forgot to add we negotiated them down from 16% !!
Hi pullmyfinger..
Based on your info, my best guess is an annual net loss of around $31k to $33k. Considering 70% of that loss will be applied to your husband’s taxable income, and 30% will be applied to your own, your tax savings will be between $9k and $10k.
There’s a great online calculator for that here:
http://www.wheatcroft.com.au/tools/negative_gearing_calculator.phpwow! glad im in vic!!!! good job on the negotiations then!!! good luck
You must be logged in to reply to this topic. If you don't have an account, you can register here.
