Reduce Your Property Tax in South Australia
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Reduce Your Property Tax in South Australia
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Commonly called Negative Gearing, the incentive was introduced by the Government in 1936 allowing investors to reduce the amount of income tax they pay to stimulate the economy by building brand new property. Property Asset Planning, 687 South Road, Adelaide, Black Forest, SA 5035, Ph: (08) 8338 7206, Web: www.propertyassetplanning.com
Transcript of Reduce Your Property Tax in South Australia
Reduce Your Property Tax in South Australia
Commonly called Negative Gearing, the incentive was introduced by the Government in 1936 allowing investors to reduce the amount of income tax they pay to stimulate the economy by building brand new property.
Negative Gearing underpins all property investing as it allows you to reduce your taxable income by offsetting costs related to the investment against your taxable income.
REDUCE YOUR TAXABLE INCOME
Negative gearing by property investors reduced personal income tax revenue in Australia by $13.2 billion in 2010-11.
The negative cash flow, when investing in brand new property, can be used to offset other taxable incomes in the form of tax deductions and refunds (Source: ATO).
By investing in a newly constructed property you only pay stamp duty on the land component and get the maximum tax deductions when building and also on the features and fittings inside the property. You can then apply to have your taxable income reduced on a weekly basis by processing a PAYG tax variation form through the ATO.
It seems many people believe that buying an old established property will be quicker and easier than building a new property. This might be because of the belief that they can charge rent right away. However, for a start, the stamp duty on an established property will be substantially more expensive than the stamp duty on building a new home. Also you will find that if you buy a property that was built prior to 1985 you won’t qualify for any building depreciation and as we know, older properties may also require a lot of maintenance and repair work.
Process of Building a Brand New Property
With a brand new investment property, the new property is built from the ground up and rent is received from the tenant. There are substantial tax deductions which reduce the owners contribution to the investment and the overall out of pocket costs.
BRAND NEW PROPERTY
With an established property, the most traditional way to invest, the property is purchased and rent is obtained from the tenant with the owner contributing the rest. There are little to no tax deductions.
ESTABLISHED PROPERTY
Property Asset Planning687 South RoadBlack Forest, SA 5035Ph: (08) 8338 [email protected]
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Learn how you can significantly reduce the amount of income tax you pay. Please Contact us
