Maxing out tax deductions

[Freedom]

I was recently challenged to contribute more .. so here goes.

With a healthy tax refund of 20K+ last year, I am realising the laws of dimishing effectiveness of the wonderfully effective tax system (still a salary earner).

When I started with IPs, I did not envisage a situation where I would no longer be benefiting from tax deductions (for each new IP), from depreciation etc, because, effectively I was maxed out with the deductions. Cash flow is still strong.

I suppose this point in the journey is a real break point - time to quit work and do property full time, time to evaulate strategy, find more value adding opportunities etc. Look at structure options. Maybe have to learn to sell one.

Basically our strategy has been buy and hold, well located, growth area, middle income properties. Mostly Gold Coast.

Has anyone else got any learnings about this stage in the journey?

 

[geoffw]

My last property was the first one I bought in a trust.

It is quite cashflow positive- but it came with furniture, so there's a lot of depreciation.

The trouble is that the the deprciation is much higher than the profit, so I can't make immediate use of a large piece of the depreciation.

But that's OK for me really, as I can carry forward losses to future years- when I expect to be earning a lot more profit through the trust- rather than this year, where the extra depreciation only earns me 25% deduction because of the other depreciation and deductions I have.