How do I pay less tax?
You can claim tax deductions for certain elements of owning investment property.
There are cash deductions for items such as interest on borrowings, rates, management fees etc.
There are non cash deductions for items such as depreciation.
If you had an income of say, $80,000, you would be paying approx $26,000 in tax. If you purchased a new investment property for $350,000 you could reduce your tax by approximately $8,000 to $18,000 and use this money to help pay for the property.
Tax savings depend on how you structure your purchase and your choice of property. There are three ways to borrow money for an investment property:
Gearing - borrowing money to invest.
Negative gearing – when your borrowing (interest and expenses) exceeds the income you receive on your investment.
Positive gearing - when your borrowing costs (interest and expenses) are fully covered by the investment income.
InvestRite Australia can show you how each works in relation to your tax deductions and property investment options. Contact us on 02 9741 8333