20/02/2023
Looking for ways to decrease the amount of tax you pay each year without earning less or spending more on deduction?
Here are two ways you can reduce the amount of tax you pay on your income through a property investment.
The first strategy is through depreciation.
Factors like the age of the property, construction materials, and any recent renovations are considered when calculating depreciation.
Owners of investment properties can claim depreciation on the building and any fixtures or fittings, allowing them to decrease their tax bill over the next 40 years, without having an extra out of pocket expenses.
This strategy is most effective when you build a brand new property.
A typical investor can receive a tax deduction of over $10,000 each year just by owning the right type of investment property.
This is in addition to the normal deduction you receive for any money spent in relation to your investment property through negative gearing.
The second way is through the Capital Gains Tax Exemption.
This tax is applied to the profit made on the sale of an investment property. However, investors can claim an exemption on any capital gains made on their duplex if they hold the property for at least 12 months.
This means that any profit made on the sale of the property is tax-free, up to a certain limit.
The CGT discount for individuals in Australia is currently 50% for assets held for more than 12 months.
By taking advantage of these tax deductions and benefits, working with experienced professionals, and investing in real estate, you can achieve strong returns and build long-term wealth.
Buying a duplex can be even more effective, as you get two investment properties and potentially double the tax benefits.
If you are interested in investing in property and want to learn more about the benefits of building a duplex, click below to find out more.
