How to calculate tax deductability?

Discussion in 'Accounting & Tax' started by aussieB, 7th Jan, 2017.

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  1. aussieB

    aussieB Well-Known Member

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    How does tax deduction work in the following cases :

    1) Redraw on a PPOR/Release of equity - If someone deposits x into a mortgage and redraws this amount, for purchasing an IP - is x considered towards tax deduction ? Say someone is on a PAYG of $100k x is $50k - then the tax is payable only on 100k - 50k ?


    2) loss on IP - Say total outgoings are 100k and rents received (total incoming) is 90k. So, this 10k is tax deductable.

    Another question is, in the above scenarios as well as whenever the term deductible debt is used, what are the monies tax deductible from ? From PAYG (multiple jobs as well) ? How does it work for people who have a business? And for those who have a PAYG and a business ? And for some one who has no income (assuming only IPs and all IPs are neutral)

    Is it correct to assume that the tax deductions are an amount that can be subtracted from the total tax liability (whatever the source of income) ?
     
  2. Propertunity

    Propertunity Well-Known Member

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    1) The interest on the loan (redraw) is tax deductible not the actual loan amount.

    2) Yes

    3) deductible against the taxable income of the entity who is on title generally. Seek specific tax advice for a multitude of possible variations on the theme.
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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