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Tax deductions for joint property - wife on maternity leave

Discussion in 'Accounting & Tax' started by KT_Blues, 27th Sep, 2015.

  1. KT_Blues

    KT_Blues Member

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    Hi guys,
    We generally split 50/50 all tax deductions for investment properties, but this year and next fin year I am on maternity leave.
    I had income for the first couple of months of the financial year (about 12K in total), for obvious reasons I was hoping to deduct large proportion of property expenses through my husbands tax return.
    I am now supported by my husband, so he is basically paying all expenses associated with investment properties
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Ownership % determimes, generally, who can deduct what. And you can only claim your share of expenses.
     
  3. KT_Blues

    KT_Blues Member

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    Thank you haps Terry!
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The losses will accumulate until you later earn income. Then you can use those losses. Ensure you still prepare and lodge a return and account for the losses during the leave.
     
  5. KT_Blues

    KT_Blues Member

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    Many thanks Paul. That's great news!
     
  6. <JC>

    <JC> Member

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    Just wondering if you take 12 months of ML. You still lodge your tax return on FY16 but you did not have much tax cus only worked for a few months but your IP is nagative gearing which mean u won't get much tax back in FY 16. Does it mean those lose can carry over till FY 17 to get the tax return back ?
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Fairly sure you can carry forward losses in personal names & trusts and they get soaked up the following year when you earn more money.
     
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  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Yes carried forward losses just defer the ultimate neg gearing. In some maternity situations it can leave a generous tax free holiday. One problem however is that ALL income must offset losses as soon as it is earned. ie you can choose when the loss is applied.

    So if wife has a $18K neg gearing loss unused in 2015 and then earns income in the next year so that her taxable income is $18K the loss MUST offset it although at $18K her marginal tax rate is 0%. This can mean losing the loss.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not sure what a tax cus is, but any taxable loss would be carried forward to the next year and this would assist reducing taxable income for that year.

    But if there is no tax payable there will be no refund. e.g. a loss of $5,000 this year carried over to next year where the person earns $15k income from work = a taxable income of $10k after loss is applied. There is no tax on $15k anyway so no tax would be saved in this case.
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    I'd cuss too if I lost the deductibility.
     
  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Hey cus a tux is what you wear with jandles to a wudding.
     
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  12. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Maybe, maybe not. The loss must still be entered into the return in 2015. The resulting tax loss if there is one would carry into 2016 and act like a deduction against 2016 year income. It must be claimed and cant be deferred until a future year.

    One of the limits of etax, mytax and DIY returns is these losses are not in prefill and require the taxpayer to be careful to claim it in the following year. Strangely carried fwd capital losses from shares do appear in prefill data etc for DIY taxpayers. Not income losses.
     
  13. <JC>

    <JC> Member

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    Thank you. It is really useful information