3 Tax Benefits That Every Property Investor Should Know

No property investor who makes a profit from investment property likes to get it slashed by a tax man. Finding out how much can you claim depreciation on a rental property is important for all property investors. You must know that you can always bring down your taxable income and enhance your earnings from an investment property. Property investors can avail of some vital basic tax benefits that will offset expenses of buying and earning income from an investment property. Investment property has also emerged as one of the most useful options when property investors seek financial freedom.

Given below are some of the major tax benefits that you should not overlook:

1. Negative gearing:

Many property investors decide to borrow for the purpose of investing in a property. However, if your interest and running expenditures become more than the investment income, you are in a loss. But, you need not worry anymore in case if you experience this situation. You may seek the negative gearing tax advantages. It will emerge as a vital part of a strong property investment planning. Amid the low-interest rate, several property investors have been receiving a huge advantage by adopting negative gearing. The property investors need to find out the allowable depreciation on rental property.

2. Capital gains tax:

You are supposed to shell out capital gains tax every time you receive profit on the sale of your property. If you buy a property for $500,000 and end up selling at $550,000, then a $50,000 profit is your capital gain. The profit will be added to your taxable income and it may impact on how much tax you may have to pay. It is worth noting that you get a CGT discount on investment properties bought after September 21, 1999. To avail of a CGT discount, the property must be held for at least 12 months period. You should also calculate your building tax depreciation. Individuals and trust will be required to pay tax on 50% of their capital gain. It implies if your capital gain is $50,000 then you will be needed to pay a tax on $25,000.

3. Tax variation form:

To tackle the current cash flow issues, you may always apply for tax withholding variation via the ATO. The moment it gets approved, you will be eligible to receive tax breaks every time you get your salary. As an employee, you get your tax refund only at the end of a financial year. You may find it tough to wait for 12 months as a property investor. As you need to pay your home loan and other running expenditures without any break.


You can seek these important tax benefits and enhance your earnings from the investment. You may seek the help of experts to calculate your tax depreciation cost. To take full advantage of these tax benefits, you may speak to a financial expert or an accountant. You may have to spend some money to avail the services of an expert, but it will offer you an opportunity to save more money. You can also avoid costly errors as well.

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