How to reduce tax on massively positively gear property

Hey guys, bought a block of land with savings as a result I do not owe a balance on it. However I do have a 230k mortgage on the build component at 4.49% interest rate, the rent expected to receive will be approx 500 per week. However my interest will be only be approx 200. Therefore even with depreciation I wont be able to negative gear it. Was wondering what options to I have besides paying heap of tax? Can I redraw the land component and invest elsewhere so I pay more interest etc?

Appreciate any feedback

 

Sign the property title over to me, then you won't have this problem

 

@D.T. haha when I read the title before I opened the thread I had the exact same thought.

 

Borrow against the equity, get a whole lot of cash. Then put that cash into investments that drop in value.

Or you could just ask the bank to charge you a higher interest rate on the loan you do have.

@jjcxu having a positive geared property is a good thing.

 

@jjcxu

Cant just increase the loan and claim deduction. Tax Tip 5: Reimbursing yourself - Impossible

You could Tax Tip 4: Borrowing to Pay investment expenses

Or Tax Tip 59: Borrowing to Buy shares
Tax Tip 6: Using Redraw to invest

 

Peter touched on one option...If you use equity to buy OTHER investments that produce income that other investment can be highly geared (ie 100%) and the sum of all investments may average out. It also exposes you to risk if the value of peroperty falls as you have a higher leverage risk against equity that you dont have now.

Otherwise sale of 50% to a spouse (state ? duty concession ?) could realise a CGT event and trigger duty etc but could be another way. Its often too costly however. Get advice to confirm.

Ensure you claim depreciation on the property !! New builds have high deductions. Ido see you have already considered this.

The other way is to consider making tax deductible super contributions with some cashflow. This is now available after 30 June 2017. Get financial advice to confirm the issue first !!

 

Self manage, find some tenants from Gumtree with no references, no rental history and a sob story.
Should do the job nicely....

 

As long as you dont get LL insurance

 

reduce the rent to $190 pw.

I knew a woman who panicked with her property become positively geared. She did a reno on the bathroom and kitchen, on the advice of her accountant, just to make it negative again.

 

Thanks for the comments guys, whilst i know positive geared is good I want to minimize my taxes in the process, my ideal scenario will be the following. Say my land component is 300k, i want to redraw those into 3x100k deposits for other 3 investments as a result I'm paying max interest on this one from a loan balance of 530k rather than 230k. Whilst I still have equity to obtain the other loans. Is that possible?

 

You can borrow against the equity in this property, then use that money as deposits on additional properties. As long as those properties meet the deductible criteria (income producing investments), then the equity loan would also be tax deductible.

 

Whats your annual income if you dont mind me asking?

If you're on 50k per annum then positive is where you wanna be.

If you're at 150k then looking into other properties and use your equity as deposits for them.

 

No

Any reborrowings, including redraw, would be deductible against the investing it is used for. The taxable position of this property will still be the same. But, assuming the same entity, overall interest deductible against another asset will reduce your overall tax.

 

You're a generous guy - I'm sure @D.T. will love you for it.