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  1. #1
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    Default Renting out our property that is negatively geared, HELP PLEASE

    Hi as the title suggests I need some advice.

    We are at crisis point with our finances DP was made redundant in march and has found employment but we are scraping by with the seat of our pants. Our mortgage payments are large and selling isnt really an option as we would lose rather than gain.

    We have the opportunity within the next three months to move interstate for better employment and we will need to rent our property out, this makes me very nervous as we will still have to come up with half the mortgage payments plus rates etc. What I am asking is what tax deuctions can we claim by negatively gearing and is it a stupid idea? Im really at my wits end we dont want to lose our house and hope that in a few years our situation will be alot brighter.

    Any help would be great. Many thanks for reading.

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    Sorry to hear you're in this situation.

    I can only really tell what we claim:
    - interest on our loan
    - rates
    - insurance
    - water rates
    - any repairs that you make whilst a tenant is in there
    - agents fees

    Basically anything to do with the running of the property - for it to be negatively geared it needs to running at a loss. So the outgoings need to outweigh the income from rent.

    When you move, you could make sure you are renting as cheaply as possible, any other loans you have eg car try to get rid of or sell and downsize.

    Do you have much equity in your home? check with your bank - you may be ahead with your payments or get your home re-valued as well to see exactly how much equity there is.

  3. #3
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    Thanks for your quick reply, can I ask roughly how much you get back from claiming all those expenses. We will definately be running it as a loss. We dont have a huge amount of equity, we will only be moving for two years and after that I hope to renovate and sell. will the bank do a valuation or do I get that done independently?

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    The bank will do a valuation.

    Depending on the year and whether we've done repairs makes a big difference to our tax return - it's hard to give a number because I also claim lots of different work related expenses and my HECS debt it also linked to it so not exactly sure how much I get from just the rental property. Roughly it might be in the vicinity of $3000. The best thing to do would be to find an online tax calculator and plug your own figures in it to get an idea of what you may get. There's loads so try to find one which includes rental properties - I'll have a hunt too.

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    Default Renting out our property that is negatively geared, HELP PLEASE

    Thanks alot for your advice I will look into that.

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    No worries! Hope it works out for you!

    http://mybank.com.au/negative.asp

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    Thankyou I used the calculator and it told me my tax deductables are the sum of $38000 does this mean thats what I get back in my tax? I have no idea!!!

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    Default Renting out our property that is negatively geared, HELP PLEASE

    No a deduction comes off your taxable income (not cash back) also be careful of capital gains as you may be hit with an amount (apportioned for the time it was rented versus principle place of residence).. Best advice is to see your accountant or a financial advisor, as this can be fraught with hidden traps and 'rules' that might affect you later...! We found out the hard way.

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    I'd seek proper financial advice to be sure, but I believe after renting it for several years (don't know the exact time) and negative gearing you are then liable to pay capital gains tax on any profit you make over what you originally paid when you eventually sell.


 

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