If you're considering taking out home loans and purchasing investment property in the near future, it could be worth looking into the various tax obligations and deductions that can be embraced in the long run. These could potentially act as a draw card for you to pursue your property goals in the coming months.
For example, if you earn a rental income from your investment property, you must declare this in your annual income tax return. However, this also means that you could be entitled to claim income tax deductions from a portion of the costs involved – for example, the interest paid on your home loan.
Furthermore, GST doesn't apply to residential rental income, which means you aren't liable to pay any GST on the rent you charge and can't claim GST on associated costs.
These rules change if you aren't renting out the whole home as an investment property. If you're only renting out specific rooms for income, you're only entitled to claim deductions based on the floor area plans. This includes spaces solely for their occupation, as well as reasonable allowances for access to general living areas like the kitchen, lounge and bathroom.
In line with this, income received from family members for board or lodging is seen as a domestic arrangement and thus not treated as income. So while you won't be taxed on this, you also can't claim income deductions on the figures either.
There are a wide range of responsibilities to understand when considering investment loans and the purchase of rental properties. It could be worth getting in contact with a financial expert to discuss the various lending options available to you.
You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we'll call you!
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.