Hi all,
I think this may be my first post to the forum. I registered in Dec but then enjoyed xmas and now I am getting back into learning about property investing before taking the jump on my first proper investment property. I say proper because I have recently moved from the uk and rent out my old house there and have no intentions of getting rid of it, especially with the exchange rate the way it is at the moment. My income from it just keeps getting bigger.
Anyway, my question today is about LMI. I was recently told that it is tax deductible as a cost of borrowing just like the interest on the mortgage is and that makes sense. My question is about how it is claimed back. I work like many people and I am thankfully a high earner putting me in a higher tax bracket. I was told that the LMI is returned to you as 20% of its initial value per year for 5 years and you get whatever %age you are taxed at of the 20%. Does that make sense?
$8000 (LMI) / 5 (years) = 20% = $1600 so I would get 38% of $1600 per year for 5 years equaling $608 per year. Is that about right. Until today I did not even know it was claimable so that's nice to know for a start.
Is it claimable as a variation so that you can get at it weekly like you can with depreciation to help increase your cash flow?
Thanks in advance and I hope you can help to sort this out for me. I look forward with chatting with you and maybe even meeting some of you.
I live in Mandurah in WA.
All the best
Paul
I think this may be my first post to the forum. I registered in Dec but then enjoyed xmas and now I am getting back into learning about property investing before taking the jump on my first proper investment property. I say proper because I have recently moved from the uk and rent out my old house there and have no intentions of getting rid of it, especially with the exchange rate the way it is at the moment. My income from it just keeps getting bigger.
Anyway, my question today is about LMI. I was recently told that it is tax deductible as a cost of borrowing just like the interest on the mortgage is and that makes sense. My question is about how it is claimed back. I work like many people and I am thankfully a high earner putting me in a higher tax bracket. I was told that the LMI is returned to you as 20% of its initial value per year for 5 years and you get whatever %age you are taxed at of the 20%. Does that make sense?
$8000 (LMI) / 5 (years) = 20% = $1600 so I would get 38% of $1600 per year for 5 years equaling $608 per year. Is that about right. Until today I did not even know it was claimable so that's nice to know for a start.
Is it claimable as a variation so that you can get at it weekly like you can with depreciation to help increase your cash flow?
Thanks in advance and I hope you can help to sort this out for me. I look forward with chatting with you and maybe even meeting some of you.
I live in Mandurah in WA.
All the best
Paul