From: See Change
This is the headline from a story in todays AFR. I couldn't post link to the AFR story but the following link covers the same Story.
http://www.lexisnexis.com.au/aus/products/samples/ITB.pdf
The ATO made a decision to disallow a scheme where people paid of their PPOR using the income from an IP , while allowing their IP debt to build up. They were then claiming all of the debt on the IP as a tax deduction.
The Federal court has overturned the ATO's decision to disallow this. The ATO has indicated it may appeal , but if this decision stands it may have a significant impact on the property market.
I wasn't involved in IP's at the time the scheme was in use, but remember hearing about it and feeling it sounded "dodgy". If however it becomes an accepted part of the investment landscape it can only add further fuel to the market, in particular to that segment ( the majority ) who only see IP's in terms of negative gearing.
Not only should it boost the straight IP market, but many will see it a reason to spend ( ie borrow ) more for their PPOR's as they will then be able to get a "bigger tax deduction ".
It may also end up setting the market up for a bigger fall further down the line as people will tend to borrow more.
I would be interested in knowing how widespread these schemes were at the time from those who were active investors at the time.
see change
it's better to be guided by your dreams than your fears
This is the headline from a story in todays AFR. I couldn't post link to the AFR story but the following link covers the same Story.
http://www.lexisnexis.com.au/aus/products/samples/ITB.pdf
The ATO made a decision to disallow a scheme where people paid of their PPOR using the income from an IP , while allowing their IP debt to build up. They were then claiming all of the debt on the IP as a tax deduction.
The Federal court has overturned the ATO's decision to disallow this. The ATO has indicated it may appeal , but if this decision stands it may have a significant impact on the property market.
I wasn't involved in IP's at the time the scheme was in use, but remember hearing about it and feeling it sounded "dodgy". If however it becomes an accepted part of the investment landscape it can only add further fuel to the market, in particular to that segment ( the majority ) who only see IP's in terms of negative gearing.
Not only should it boost the straight IP market, but many will see it a reason to spend ( ie borrow ) more for their PPOR's as they will then be able to get a "bigger tax deduction ".
It may also end up setting the market up for a bigger fall further down the line as people will tend to borrow more.
I would be interested in knowing how widespread these schemes were at the time from those who were active investors at the time.
see change
it's better to be guided by your dreams than your fears
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