if i rent my house out and there is a short fall of 1000 buck a month can i claim it all back at tax time?

Hi Andy,

I should preface my answer by saying that I am not an accountant (- although you may well receive answers from others who are) but from experience I can tell you that when it comes to the end of the financial year, you need to show the tax man all the income and expenses for your property for the last 12 months.

Any profit will be taxable and any losses you may receive a rebate on. However the rebate will not be your $1,000 per month, it will instead be calculated at your usual mean income tax rate.

Therefore if you were making a $1,000 per month loss (- i.e $12,000 per annum) and paying 33% income tax, then you would expect to receive something in the order of 33% of your loss across the year - i.e 33% of $12,000 = $3,960 rebate.

Hope that makes sense?

Hi Andy,

You most certainly can as what you have described is termed negative gearing, that is any loss incurred can be deducted from your personal income.

So if you earnt 100k and your property ran at a loss of 1k per month you would be taxed on 88k.

Make sure you get a depreciation schedule done as well as this could also add deductions to your taxable income.

Also important to get an accountant who is familiar with investment properties.

Happy to provide some recomendations if you like?

Hi Andy,

With regards to the repayments you are making at the moment, do you know if these are interest only (not paying down the debt) or principle and interest (the loan is reducing).

There will be other people way more qualified to answer this question for you than me but this info would be super helpful for you to get a more accurate answer!

Thanks,
Craig

Hi Andy,

What has been mentioned above is correct but from an accountants perspective, what is important is how are you reaching that number of $1,000 short fall per month?
As Colin said, you need to work out the negative gearing. Important factor when you are working out the short fall from taxation point of view is what is your repayment in terms of investment loan -- are you making interest plus principal payment or interest only payments? Secondly, you would have heard the term 'depreciation' which is not a real expense but tax deductible and contributed towards your negative gearing.

Finally simple answer to your question is that what you get back in your tax return considering your property is negatively geared is only a portion of $1,000.
If you pay tax at a marginal tax rate of say 30% what you expect to get back out of $1000 negative gearing is $300.

Hope this helps.

If you need more specific numbers and understanding, we will need to talk and get more information to find out what you have included and what you haven't when working your $1,000 shortfall.

The negative gearing is the key issue for tax.
If you are paying principle and interest repayments you can only claim the interest part. If interest only, then you would be looking at the difference.
You should also get a depreciation report done, which might see a significant increase in the negative gearing amount, and hence tax refund.
If you’d like to make an appointment I can go through the details of this more thoroughly.
Todd.