When you purchase a property for investment purposes and when interest is more that rental income, or when gearing is negative, it creates a loss which can reduce other income such as wages and reduce the tax which we pay.
Tax rate above $80K income is 40% + medicare levy
So If my loss is $10,000 (excluding depreciation) i can expect my refund to be $4150 which means that i will have to pay only $5850 from my pocket to own the property.
In other words :
I have to earn $10,000 and then pay tax of $4150 and then when i am left with $5850 - i will pay to the bank as interest.
This means;
The cost of the property is $10,000 and not $5850, however after attending 100's of seminars, i am told the cost of the property is $5850!
Can someone tell me, If I am right or wrong.....
Tax rate above $80K income is 40% + medicare levy
So If my loss is $10,000 (excluding depreciation) i can expect my refund to be $4150 which means that i will have to pay only $5850 from my pocket to own the property.
In other words :
I have to earn $10,000 and then pay tax of $4150 and then when i am left with $5850 - i will pay to the bank as interest.
This means;
The cost of the property is $10,000 and not $5850, however after attending 100's of seminars, i am told the cost of the property is $5850!
Can someone tell me, If I am right or wrong.....