The answer to this question is, "It depends on the scenario". If you are planning to buy a rental property that is cash flow negative, you need to look at the future capital growth potential and the land size of the property, i.e. is this a subdividable section or is there value left in the property which you can use to refinance later?
The current tax law allows that any losses generated against cash flow negative rental properties can be claimed against your personal income if structured correctly. This means that if your average tax rate is 33%, for every dollar of loss, you will get 33 cents back.
Thank you for the incredibly detailed assessment of the improvement discrepancies, all the considerations and the suggested course of action. You've made everything understandable and clear.
In all a good result, thank you very much for all your involvement Maggie, you've been wonderful to work with and certainly made my first home buying rodeo a lot smoother than it might otherwise have been!
Thanks again, I wouldn't be making such informed decisions without you!
- Ben Tong, November 2020
Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.
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