Rent Out The Old Home and Buy a New Home

[Konfrendo]

HI folks

I have bought a 2 bedroom Unit for 300,000 2 years back. I still own 150,000 mortgages to bank.

Now I am planning to buy a new home for around 450,000 and rent out my old home.

My combine mortgage will be around 550,000 (50,000 deposit for new home).

Can I be able to offset all my rental income against my Mortgage interest payments to reduce my tax liabilities?

Thanks for your advice.

Regards

Frendo

[MelbKate]

The interest repayments on your investment property loan can be offset against your income tax, along with other expenses but only if the property is making a loss (the rent isn't covering the mortgage and expenses). This is basically what negative gearing is.

You cannot offset mortgage repayments on an owner-occupier property.

[francinemelbour]

Remember: 'knowledge is power,' and the more you know about property tax, then the greater chance you have of reducing it. :)

[alyna]

The durable argument of whether it's best to buy a new home or older one dates back centuries. And it's never quite been resolved.

For every qualifier, there's a disqualifier. For every "on one hand," there's an "on the other hand."

[alexmustang]

You can also rent your current home, and go get one of those cheaper Winnipeg apartments for rent while saving up some money to buy your own house.:cool:

[adrianm]

Hi Frendo

Not sure where you're at in the process.... as your post was back in April.

You'd have to check with your tax accountant for your specific situation but the general summation is that you'll be able to use the shortfall in rent / expenses / depreciation etc as deductions on your income from rental properties only (Negative gearing as MelbKate posted)

If you live in the new house you are going to buy (ie. not renting it out), you can't use mortgage payments (interest) as deductions.

** I assume you live in Australia. In USA, I understand that you can use own home mortgage repayments as tax deductions.

Hope its all working out for you!

Happy wealth building!
Adrian

[james700]

The interest repayments on your investment property loan can be offset against your income tax, along with other expenses but only if the property is making a loss (the rent isn't covering the mortgage and expenses). This is basically what negative gearing is.

You cannot offset mortgage repayments on an owner-occupier property.