Claiming Negative Gearing On Investment Properties

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Garry
Posts: 53
Joined: Wed Aug 12, 2009 12:22 pm

Claiming Negative Gearing On Investment Properties

Post by Garry »

Hey there,

I own two houses is Sydney; one of which I am currently using as an investment and am claiming the Negative Gearing Tax benefits as the rental incomes is not enough to cover my loan repayments.

I am selling the property I am living in because I want to move into the house that is being used as an investment and am seeking advice on if I am able to still claim the tax benefits on the asset once I have moved in.

Am I penalising myself if I do not claim the tax on the property while I am living in it and paying it off? What are the genuine penalties (if any) if the bank wishes to make a point of chasing up the issue of the loan being for investment purposes?

Look forward to hearing from you.

Garry.

Lyle Tran
Mortgage Specialist
Posts: 17
Joined: Tue Aug 28, 2012 11:36 am

Re: Claiming Negative Gearing On Investment Properties

Post by Lyle Tran »

Hi Garry

Thank you for your forum post.

If you are looking at moving into your investment property, this will then be classified as owner occupied.

For tax purposes, you will only be able to claim the deductions such as interest and council rates, only for the period for when the property was used for investment purposes. Please refer to your accountant to confirm.

The banks generally doesn’t know what you use the property for unless you advise them of the change. If you would like to advise the bank of the change, you just need to send through a short letter to advise them. But this will not affect the loan in any way.

Hope this helps. If you would like advise on tax benefits, you will need to refer to your accountant.
Lyle Tran
Mortgage Consultant
P |1300 889 743 E |lyle@homeloanexperts.com.au
The Home Loan Experts

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Claiming Negative Gearing On Investment Properties

Post by Otto Dargan »

Hi Garry,

Yes Lyle is right in the feedback she has provided!

To elaborate on the above comment, the bank does not usually follow up on these types of issues; they just want to make sure you are paying your repayments. The Tax Office usually takes care of these issues.

What you do with the Bank is a separate matter to what you do with the Tax Office. It doesn't matter if your loan says “Investment Loan” or “Home Loan” on your statement, what matters is what you are actually using the money for.

Once you move into the property that is listed as “Investment Loan” you are no longer entitled to the Negative Gearing Tax.

Your query is best suited for an accountant; our advice is general advice only. However you can refer to our negative gearing page for more information. Please refer any tax questions to an accountant as tax in very complex and beyond my areas of expertise.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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Garry
Posts: 53
Joined: Wed Aug 12, 2009 12:22 pm

Re: Claiming Negative Gearing On Investment Properties

Post by Garry »

Hey guys!

Thank you for your replies, you have both been a great help!!

Cheers,

Garry!

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