Understanding tax implications
When you earn an income from your investment property, it's added to your existing taxable income eg.
•You take home a wage of $80k per annum
•You earn $20k per annum from your investment property
•Your overall taxable income is $100k
Claimable deductions include interest payable on your loan, property management fees, insurances held against the property (with income protection insurance 100% tax deductible when you own an investment property), attendance at educational seminars, purchasing property investment books and the costs of maintenance associated with the property*#.
Whilst the rules on depreciation changed as of May 19 2017, some of it is still claimable depending on the actual dwelling itself. From that date onwards, investors have been unable to claim the plant and equipment component on established dwellings. This has applied in circumstances where established properties were bought and the investors weren't the original owners. They have been, however, still eligible to receive depreciation on the building, which is a separate part of the depreciation schedule.
Investors who build new - or were the original owners of a property - will still be eligible for both parts of the depreciation schedule: plant + equipment plus the building. It's for this reason I continue to support the purchase of new or off the plan dwellings in order to get the maximum tax deductions.
* For a full list of taxable deductions please visit the Australian Taxation Office via this link: https://www.ato.gov.au/General/Property/Residential-rental-properties/Expenses-you-can-claim/
# Please seek professional advice to confirm your personal and investment property claimable tax deduction items
My tenants have signalled that they are interested in buying my investment property. How do I decide whether to sell or hold?
Firstly don't go into selling mode - this is when a landlord starts to think "Well if they want to buy it, that means we don't have to replace, repair or do whatever maintenance is needed in the property."
How do I choose between one suburb & another in Melbourne?
Research, research and more research because location, location, location is not always the reason to buy in a particular suburb!
I'd like to invest interstate, but I don't know the area well enough. What should I look out for?
Well the first thing you should not do is look when you are on holidays in a holiday destination.
Can I invest in property if my income is below $50,000pa?
Yes you certainly can.
How can I protect my investments if I lose my job?
This is a question I am always asked when discussing the possibility of investing in property.