GWW wrote:Some intersting reading on here re Real Estate industry, thanks.
Another question - how lucrative can "negative gearing" be?
I wouldn't say it is "lucrative" but that really depends on how much you can carry (as a loss per month and still pay the mortgage).
It also depends on your tax bracket. Personally what I've found, is that if you are not in the highest tax bracket, then it's not worth it.
If you pay 20000 mortgage payments and receive 12000 in rent, then you can claim the difference. If (of that 12000) you have 3000 deductions, such as renovations, you can claim that. If you get charged interest of 7000 then you can claim that. In this situation, you have 8000 in losses, 3000 deductions, 7000 in interest. So 18k will come off your taxable income.
But that 18000 will reduce your taxable income - say from 78 to 60. The tax might only be 35c in the dollar, so the most you'll get back is 18000 x .35 = 6300.
You can see just from that the 8000 diff in mortgage payments to only receive 6300 at the end of the year doesn't add up. They're indicative figures of course, and you'd hope the rent pretty much covers the mortgage but it will give you some indication of what you're in for.
stuck a 2L bottle of green cordial in the freezer.. cant get chilled quick enough!!
