Tax ? Advise please

[borry]

Hey guys,

Just got a few quick questions in regards to tax time. We bought a house 2 years ago and have now had to move due to work
commitments. So, we rented our house out, and rent anew in the new city. Now we have been saving in case we need to pay tax on our rent income but I just have a few questions.

1. Our mortgage repayments are currently $80 more a week then our income rent, is it still an income ? Or not because we aren't actually making money.

2. Is our new rent tax deductable ? Being we were forced to love for work
related purposes ?

3. Moving costs are claimable I take it ?

4. Again with the house, we only own the single
property. Does this have an outcome on if it has to
be declared ? Are improvements to the house, within the financial year priro to it being let out, a tax deduction ?

Thanks alot guys

[VTR8Clubby]

I suggest you speak to your accountant.
Here's a few simple points.
The interest on the mortgage is deductible.
The rent from your house is income.
The two should balance out somewhat and leave you with either some income or some negative gearing. Then you get to claim lots of other deductions which your accountant will tell you about when you speak to him.
You need to get a depreciation report done on your house to maximise depreciation on the house and new renovations. Get this done before you see your accountant.
This is who I used for my last report and I was very happy with the result.http://depreciator.com.au/

I don't know if moving for work is claimable but I doubt it. Nor is the rent you are paying.

Did I mention that you should speak to your accountant???

[SICK SS]

Hey guys,



1. Our mortgage repayments are currently $80 more a week then our income rent, is it still an income ? Or not because we aren't actually making money.



Thanks alot guys
its negative geared mate so short answer no.

[Vulture]

The money you get from renting out your house is (and must be declared) as income. You are hoping the tax payable on this income is going to be offset by the deductions on the mortgage interest. The rent you pay on the other house you are living in is not deductible-regardless of whether you had to move for work purposes.

[JC1971]

This is who I used for my last report and I was very happy with the result.http://depreciator.com.au/


Use BMT, much better. I recommend them to all my clients. You might pay a little more but these guys are excellent and I see a lot!

Talk to you accountant first before you do anything. If you decide to move back in within a five year period, it won't affect your CGT PPOR exemption :)

Cheers,

JC

[SS Enforcer]

See an accountant mate as you have plenty of tax deductions available to you if your renting your house.

Did you make improvements or repairs ... they needed to be done didn't they :), depreciation,travelling to inspect your property, accountants fees, council and water rates as well as interest payments are all tax deductible. A good accountant will get you a nice tax return I should think if not find another accountant.

cheers

[VYBerlinaV8]

You need to see the accountant to get advice as to how to do this, because there are lots of things to claim, and the benefits aren't confined to offsetting the rental income.

You also need to remember to ask about paying Capital Gains Tax if and when you sell this house.

[NickS]

If you decide to move back in within a five year period, it won't affect your CGT PPOR exemption :)

It's 6 years ... :yup:

As others have said, moving costs and rent of your new place are not tax deductible. Neither is the principle portion of your mortgage payments i.e. only the interest charged is deductible.

In your return you need to declare the rent you collect as income ... deductions against this can include;

Advertising, Bank Fees, Depreciation (definitely get a depreciation report prepared by a quantity surveyor), Interest, Mangement Fees / Commission, Council Rates, Water Rates, Repairs, Gardening, Borrowing Costs, Travel re; inspections / meeting with property manager / talking to accountant and probably others that I haven't thought of at the moment.

Talk to an accountant ...

[benniemc]

Like the others have said, go see a good accountant, not someone like H&R Block.

We have a rental, like ours yours in negative geared so your not making a profit, your operating at a loss...

You can claim all kinds of stuff on your rental, from tax paid on maintainence, depreciation on fixed appliances and furnishings like carpet/blinds, and heaps of other stuff!

We get $1000s back in tax every year!

[maginoodle]

Hi all, i did a search so i thought i would add to this thread.
I know it isnt tax time but i want to start doing all my calculations early, so i dont end up rushing it in july.

I have a loan that is like a credit card. I currently have 2 rental properties on that loan. I get charged interest every month on the full loan and not the two individual properties. What i need to do is to be able to work out how much interest is charged to each property. I have no idea on how to do this.Once i get the two properties down so that the loan is 50/50 it will be easy but for the previous 6 months and probably the next year i will need to be able to work it out so that i can claim the interest correctly.I know if i get it wrong it wont really matter as long as i claim the correct overall amount but i want to do it properly.

Any help appreciated.

Cheers Shane

[steve_t]

Hi all, i did a search so i thought i would add to this thread.
I know it isnt tax time but i want to start doing all my calculations early, so i dont end up rushing it in july.

I have a loan that is like a credit card. I currently have 2 rental properties on that loan. I get charged interest every month on the full loan and not the two individual properties. What i need to do is to be able to work out how much interest is charged to each property. I have no idea on how to do this.Once i get the two properties down so that the loan is 50/50 it will be easy but for the previous 6 months and probably the next year i will need to be able to work it out so that i can claim the interest correctly.I know if i get it wrong it wont really matter as long as i claim the correct overall amount but i want to do it properly.

Any help appreciated.

Cheers Shane

Just calculate the percentage value of each property loan you have. If one home loan is $200,000 and the other is $150,000 then the total loan amount would be $350,000.
At 7% interest you're paying $24,500 P.A. (not taking into account any principle you are paying off).
$24,500 divided by 12 months equals $2041.67 a month.
Now $200,000 for the first house out of a total of $350,000 is 57.14% of the loan.
57.14% of the $2041.67 is $1166.61.
Thus, of the $2041.67 a month you're paying in interest, $1166.61 is for the first house ($200,000) and $875.06 is for the second house ($150,000).

Clear as mud? You can hopefully do the calculation for your houses following these steps

[Peter B - CV8]

Not necessarily. You can only claim the interest portion of your loan/repayment & if he's paying principle & interest - then he can't claim the whole payment. Would be best to have the loan changed over to interest only to avoid any complications & if he wants to make some principle payment - pay them into an offset account

[Peter B - CV8]

Does it really matter ??? Both property incomes can be combined & then both combined expenses (including loan interest) is deducted. If you've made any $$$ after that you have positive income & pay tax - or if it's a loss, you cut a bot off your personal tax bill.

[maginoodle]

Does it really matter ??? Both property incomes can be combined & then both combined expenses (including loan interest) is deducted. If you've made any $$$ after that you have positive income & pay tax - or if it's a loss, you cut a bot off your personal tax bill.

Hi, i dont think it really matters as on my tax return it will automatically combine to give my overall return, but i want to get it pretty good as i want to know how each investment is performing and if i end up getting audited i will have the correct figures.
Say i owe 150,000 on property 1 and 200,000 on property 2 and the interest charged for the month is 2000. What i want to be able to do is work out how much of that interest belongs to each property. If theres a formula i can use that would be good as i could just adjust the figures each month as the interest gets charged.

Cheers Shane

[steve_t]

Hi, i dont think it really matters as on my tax return it will automatically combine to give my overall return, but i want to get it pretty good as i want to know how each investment is performing and if i end up getting audited i will have the correct figures.
Say i owe 150,000 on property 1 and 200,000 on property 2 and the interest charged for the month is 2000. What i want to be able to do is work out how much of that interest belongs to each property. If theres a formula i can use that would be good as i could just adjust the figures each month as the interest gets charged.

Cheers Shane

Not sure if you saw my post but here's your formula

Property 1's share of the interest is:
P1=Property 1's loan
P2=Property 2's loan

P1 / (P1 + P2) * Monthly interest.

So for your example:

150,000 divided by 350,000 = 0.4286

0.4286 multiplied by 2000 = $857.14

[maginoodle]

Thanks Steve, i can understand that now. As my interest is different every month, i can now work out exactly what interest belongs where.

Cheers Shane