Negative gearing occurs when the expenses of owning an investment property, including loan interest, exceed the rental income received. This creates a loss, which you can offset against other income to reduce your overall taxable income.

You can claim a range of expenses as deductions, including interest on your investment property loan, property management fees, council rates, property insurance, repairs and maintenance costs, and depreciation on eligible assets within the property.

As of my last update in September 2021, travel expenses for inspecting your investment property are generally not deductible. However, some limited exceptions may apply, such as if the property is a commercial property.

CGT is a tax on the profit made from the sale of an asset, including investment properties. If you sell an investment property for more than you paid for it, you may be subject to CGT. However, there are concessions and strategies available to minimize CGT, such as the 50% CGT discount for assets held longer than 12 months and the main residence exemption if the property was your main home for part of the time.

If you use a loan to buy an investment property, you can generally claim a deduction for the interest on that loan. However, you need to ensure that the loan is specifically used for the investment property and that you keep proper records to support your claim.

Yes, you can claim deductions for expenses related to repairs and maintenance of your investment property. However, substantial improvements or renovations that enhance the property’s value may need to be depreciated over time, rather than claimed in full as an immediate deduction.

To get a depreciation schedule, you typically engage a qualified Quantity Surveyor. They will assess your investment property, identify all depreciable assets within it, and determine their respective values. The Quantity Surveyor will then prepare a detailed report, known as a depreciation schedule, which outlines the deductions you can claim for both Division 40 (Plant and Equipment) and Division 43 (Capital Works).

Yes, obtaining a depreciation schedule can often be worth the cost and effort for several reasons, such as maximise deduction, long term tax benefit for a one-off cost and compliant documentation for audit.

Capital gain is the financial profit realised when you sell or dispose of an asset, such as stocks, real estate, or valuable possessions, for an amount higher than the original purchase price. It represents the difference between the selling price (proceeds) and the cost basis (purchase price and any associated acquisition costs).

Capital gains in Australia are subject to taxation under the Capital Gains Tax (CGT) regime. If you’ve owned the asset for over 12 months, you may qualify for a 50% CGT discount on the gain, with the remaining 50% added to your taxable income and taxed at your marginal rate. Capital losses from other investments can offset capital gains, and any excess losses can be carried forward. There are exemptions for primary residences, concessions for small businesses, and different tax rates for superannuation funds. For accurate guidance in navigating the complexities of CGT, it’s advisable to consult a tax professional or accountant, such as Investax Accountants, as tax laws may change over time.

Yes, Investax accountants are well-versed in CGT calculations. We can help you accurately determine your capital gain by considering various factors, such as the purchase price, sale price, holding period, and eligible deductions.