Negative Gearing tax "loophole"

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This article can't be serious?

 

Can't access as subscription only...

 

Got into paywall

 

Why anyone would deliberately leave their apartment vacant to access NG is beyond me.

Only a microscopic section of the human race have more money to burn than sense - and also willing to do this dumb thing.

 

Am I missing something? If it's vacant then no expenses can be claimed unless they are pretending to have it for lease for three times the appropriate rent and no tenants are found.

 

Someone said this at work the other day and I told him rubbish, but people are really doing this.

 

This is right. There are no tax advantages with this as expenses couldn't be claimed.

 

Yeah, it is just a kooky thought bubble that embittered renters have grabbed and run with. I tried to explain to someone the other day why it is dopey to leave a place vacant. I heard that there are a lot of new apartments in the three eastern capitals owned by mainland Chinese and left vacant. I'm not sure if that's true.

 

If they are doing this, then they had better hope they are never audited.

Our son was. One of the first things the ATO did was look up the rental advertisements and compare his listing with comparable properties. His asking rental was in line with others so he passed the audit ok.
Marg

 

You might get away with it unnoticed for a few months, but not years.

Was the property vacant for an extended period?

I've heard that most ATO audits are not random. eg - work related deductions with very little work income, property deductions with no or little income etc.

 

I may be dopey at the end of the day but I don't understand - if I have a property, and loan repayments are $20,000. Management is $3,000. Land tax et al is $7,000. It's available for rent (at whatever value I like).
Then why don't I have
income from the property = $0,
expenditure on (trying to) make money from the property = $30,000.
I've made a $30,000 loss, plus depreciation, = rather spectacularly negatively geared.
Now I'm not saying buying some just to have negative gearing is sensible, at least for me, but @Terry_w are you saying that the $30,000 expenses + depreciation would not be a tax advantage?

 

@mcarthur it needs to be income producing. If you are just leaving it vacant then the expenses would be a capital expense and get added to the cost base if it is ever disposed of by sale/transfer. On the basis that it is available for rent but is vacant for a protracted period, then I imagine the asking rent on any advert needs to be "reasonable."

 

Ah ok, but I can have it on the market for rent for weeks and it still counts (assuming it eventually rents). What is the definition of "income producing" - obviously from my little example simply making money isn't quite right. I assume it's something like "available to make money" or something.
So how long...?
Perhaps the answer is "as long as an ATO assessor's pencil"

 

This is true but exactly how many, nobody knows. But I can guarantee you it's nowhere near as many as the MSM make out. Apparently plenty have moved their capital to Aus and US and even though they're losing $'s, it's safer than at home so they don't mind losing money.

I doubt they're all negative gearing but as usual a few will do the "unethical" and try.

 

Long vacancies triggered the audit.
Marg

 

The taxpayer has to be genuinely seeking tenants otherwise not deductible. This is what some with holiday houses tried to do, but the ATO was all over em - like vomit on a sweater.

 

I can assure you many people get away with property rental fraud (under or non-declaration) for years, even decades. Most people never get audited so plenty get away with it, ATO detection mechanisms are not that great, real estate agents don't have to report anything and there doesn't seem to be any cross referencing of rental properties and declared properties.

As for NG yeah it is a legal tax loophole/shelter/dodge call it what you will.

 

How can you assure me?

If a taxpayer is claiming significant deductions related to property investments and no income they WILL get audited. If they're not claiming deductions and just pocketing the income then they're unlikely to get audited.

You seem to be talking about undeclared income. Totally different to what is being discussed here.

It's been a fundamental part of our tax system for generations. Call it what you will.