cf+/- question

[Bantam Roosta]

Could someone please clear up a possible misunderstanding I have.

If your property is -ve geared you can claim all your running costs against the rental income and any personal income? This is because it is classed as a business so losses can be offset?

My current understanding is that you can't claim running costs on a +ve geared property. Is this correct?

BR

 

[ani]

Could someone please clear up a possible misunderstanding I have.

If your property is -ve geared you can claim all your running costs against the rental income and any personal income? This is because it is classed as a business so losses can be offset?

My current understanding is that you can't claim running costs on a +ve geared property. Is this correct?

BR

Hi BR

No they are both treated exactly the same.

You add all rental income to your personal income and deduct all rental expenses.

With a -ve geared property your expenses are higher than the rental income so this reduces your overall tax liability. With a +ve geared property you are increasing your tax liability as the rental profit increases your overall income.

 

[Bantam Roosta]

So, for example.

$50k wage. $10k rental income. total $60k.

eg1 +ve. property expenses $5k. Taxable income = $55k tax bill will increase?)

eg2 -ve. property expenses $15k. Taxable income = $45k (thus reducing overall tax bill?)

If this is the case then it all makes sense. I was getting confused, thinking that you couldn't claim costs on cf+ property.

Thanks Ani.

BR

 

[geoffw]

That looks like the right idea BR.

Expenses may include non cash items- like depreciation, for instance- so that may reduce the taxable income from a CF+ property.

On the other hand, you cannot offset the cost of improvements against this year's income- you have to depreciate them (unless they're below a threshold amount).

Nothing is simple.