Tax question re stay at home mum

[Palabu]

Hi everyone

I have a tax question and I was hoping someone on the forum might be able to provide me with an answer.

My wife and I bought a new PPOR in November 2009 and we rented out our previous PPOR (which is now our first IP). The IP is in both our names. My wife is a stay at home mum and her only income for the 2009/2010 tax year was 50% of the rental income of the IP from November ‘09 to June ’10. When her share of the deductions are taken away from her share of the rental income she has a negative taxable income.

My question is, can she carry this negative taxable income forward as a tax loss and apply it against future earnings?

You help with this would be much appreciated.

Many thanks

P

 

[Propertunity]

My question is, can she carry this negative taxable income forward as a tax loss and apply it against future earnings?

Yes, you can (or in this case your wife can) carry forward tax losses from year to year to be offset against future income.

As an aside, she may also run foul of any Centrelink benefit she may be getting. My understanding is that they take into account her 50% share of the rental income but do not consider the expenses incurred in achieving that.

 

[Palabu]

Thanks Propertunity,

We don't claim family tax benefit part A or B until after we have lodged our tax returns, therefore we don't have to repay anything back to Centrelink as a result of them overpaying us during the year.

P

 

[RumpledElf]

Centrelink do take expenses from property investment on board but depending on which department you are dealing with, you either get to use the actual figures you give the ATO, or they just make their own up and decide what your expenses are. Much like the way they deem you to be earning X% interest on your savings, even if you've just got a fortnight's pay sitting in a 0.001% interest everyday transaction account.

If she's made a loss from property, that loss is counted as income for FTA/FTB purposes. As in, if she lost $10k Centrelink deems her income to be $10k. Doesn't pay to negative gear if you're a SAHM.

Strange but true.

 

[jrc]

My understanding is that Family Tax Benefit your wife receives is exempt income and although not taxable the IP losses are applied first to the exempt income. It is only if there are losses exceeding the exempt income that those losses are carried forward.

 

[Palabu]

Thanks everyone for your propmt replies, much appreciated. We have both lodged our 2010 tax returns so we will wait and see what Centrelink come up with in relation to Family Tax Benefit part A and B.

P