If you are buying an investment property your
accountant/or accredited financial advisor can advise you about how to
structure your purchase in order to obtain the maximum taxation benefits from
your investment, both ongoing and in the event of a sale of your property.
It is too late to discuss the matter after contracts are unconditional.
Planning must be finalised prior to entering into the contract.
Planning will take care of the following:
• Name in which property is to be purchased.
• Consideration of the effect of negative gearing.
• Coordinating legal and finance matters in relation to the purchase.
• Land tax payable (if any.)
• The likely effect of capital gains tax when the property is sold.
Planning to maximise deductions
When purchasing investment property you may be able to claim depreciation on
the building.
Likewise, many inclusions, which form part of the purchase price, are able to
be depreciated. These include kitchen cupboards, light fittings, carpets,
blinds, curtains, hot water systems, stove etc.
Planning to reduce costs
In most cases, interest incurred on loans for investment property is fully tax
deductible. (Note that interest on borrowings for your principle residence is
generally not deductible.) Your accountant/or accredited financial advisor may
be able to refinance loans to adjust for this fact.
Capital gains tax on the sale of the new or your previous dwellings may be
diminished or abolished through proper planning. Professional advice is always
important prior to purchasing any property investment.
