Hello Jayson. Welcome to the forums.
A property is said to be negatively geared
when the interest on the loan is higher than the net rental income
, meaning the investor is making a loss. Under current tax laws, this loss can then be deduced from other income, such as wages, reducing the investor’s taxable income in that financial year. The idea behind it is that any short-term losses will be outweighed by long-term capital gains
Labor has proposed limiting negative gearing to new housing only if elected. That essentially means investors can only deduct net rental losses from newly constructed properties from their wage income.
Investors who purchased existing properties before the commencement date will still be able to claim losses against wage income.
Although losses from existing properties can’t be deducted from wage income, losses can still be offset against other investment income such as share dividends or carried forward to offset the capital gain on the property when it’s sold. We recommend speaking to your accountant to discuss this further.
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Give us a call on 1300 889 743
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