Many Australians who invest in property take advantage of the government tax incentives available to them as a property investor. Negative gearing is the most popular one.
What is negative gearing?
The tax office gives you allows you to claim the expenses associated with owning an investment property as deductions. These deductions are available to property investors as they help the government with their public housing program. Property investors provide housing to people who can’t afford to buy their own, which means these people don’t put pressure on the government to provide them with public housing.
The ato allows you to deduct the expenses from your total income earned for the financial year, which includes your salary. When your employer pays your tax, they calculate it on your yearly salary, but when you do your tax return and your taxable income reduces, then the tax you pay also reduces. This means that the tax your employer has paid on your behalf is usually too much, and you are due a refund from the ato.
Heres are 3 benefits of negative gearing