Hi guys.
I've been googling for the past few days and am yet to find a solid answer to my question! I hope someone here can help.
I am considering purchasing an investment property with some friends which would be a tenancy in common arrangement. What I want to know is can we make use of negative gearing like it is intended or does the tenancy in common arrangement complicate/change the rules?
I guess I'm also trying to get my head around negative gearing. My understanding is that if a person purchases a property as an investment, then whatever they spend on the property gets claimed as a deduction as follows; (numbers pulled out of thin air for examples sake)
Earning $100K PA and getting taxed $40K.
Investment is bought and at end of year after any income the property makes there ends up being a loss of $10K.
If I understand correctly the above situation would mean that the investor instead of getting taxed on his full $100K he only gets taxed on $90K thereby minimising his tax.
Assuming that the above is right what would happen with tenants in common? Say each investor earns $50K and the property runs a loss of $10K at the end of the year. If each of these owners has an equal quarter share does it mean that they will each get taxed on only $47.5K each thereby splitting the negative gearing equally down the middle with everyone?
I've been googling for the past few days and am yet to find a solid answer to my question! I hope someone here can help.
I am considering purchasing an investment property with some friends which would be a tenancy in common arrangement. What I want to know is can we make use of negative gearing like it is intended or does the tenancy in common arrangement complicate/change the rules?
I guess I'm also trying to get my head around negative gearing. My understanding is that if a person purchases a property as an investment, then whatever they spend on the property gets claimed as a deduction as follows; (numbers pulled out of thin air for examples sake)
Earning $100K PA and getting taxed $40K.
Investment is bought and at end of year after any income the property makes there ends up being a loss of $10K.
If I understand correctly the above situation would mean that the investor instead of getting taxed on his full $100K he only gets taxed on $90K thereby minimising his tax.
Assuming that the above is right what would happen with tenants in common? Say each investor earns $50K and the property runs a loss of $10K at the end of the year. If each of these owners has an equal quarter share does it mean that they will each get taxed on only $47.5K each thereby splitting the negative gearing equally down the middle with everyone?
