As far as I know, Joe Hockey apparently wants discussion regarding reforming the tax system and part of this pertains to whether negative gearing will stay or go. Personally I think a strong force holding it back is that a lot of politicians most likely have investment properties so would be against the idea, but that's obviously not the only force at play.
So the first question is a poll - do you think it will ever be removed?
Secondly, I want to understand the net impact it would have on a property portfolio if negative gearing was removed. If NG was removed, would this mean interest, repairs, and all other expenses are no longer tax deductible?
Assume $100k salary
Assume 4 IPs in portfolio paying $300/week ea and costing say $300/week with interest, PM, water + council, repairs.
$1k depreciation per property
With Negative Gearing
Income = $162,400 pa
Expenses = $62,400 pa
Depreciation = $4k
Tax Paid on $96,000 = $23,467
Income less expenses and tax = $72,533
Without Negative Gearing
Income = $162,400 pa
Expenses = $62,400 pa
Tax Paid on $162,400 = $48,035
Income less expenses and tax = $51,965
Is the above correct?
Or would you be able to claim expenses to offset the income from the properties but not negatively gear (ie if income from properties is $100k you can claim $100k expenses against it but not $150k)?
Cheers
So the first question is a poll - do you think it will ever be removed?
Secondly, I want to understand the net impact it would have on a property portfolio if negative gearing was removed. If NG was removed, would this mean interest, repairs, and all other expenses are no longer tax deductible?
Assume $100k salary
Assume 4 IPs in portfolio paying $300/week ea and costing say $300/week with interest, PM, water + council, repairs.
$1k depreciation per property
With Negative Gearing
Income = $162,400 pa
Expenses = $62,400 pa
Depreciation = $4k
Tax Paid on $96,000 = $23,467
Income less expenses and tax = $72,533
Without Negative Gearing
Income = $162,400 pa
Expenses = $62,400 pa
Tax Paid on $162,400 = $48,035
Income less expenses and tax = $51,965
Is the above correct?
Or would you be able to claim expenses to offset the income from the properties but not negatively gear (ie if income from properties is $100k you can claim $100k expenses against it but not $150k)?
Cheers