Monday, 9 September 2013

Tax tips, part 14: property

If you earn rental income or your property is available for rent, your net rental income (loss) gets entered into section 21 of your tax return.  Many Australians choose to negatively gear their property investments; hence they record a loss over a number of years, hoping that a future capital gain will more than recover the accumulated losses.

The MoH was a direct residential property investor for about a year recently, which straddled two tax years.  It was intended to be a medium-term strategy where I upgraded to a new house and rented out my previous apartment.  My financial returns were OK, but the experience of owning residential property required far more hands on involvement that I have ever experienced with shares.  With residential property you have two constituents you will never encounter on the sharemarket: difficult and/or evil tenants and difficult and/or useless real estate agents.