The answer to this question is, "It depends on the scenario". If you are planning to buy a rental property that is cash flow negative, you need to look at the future capital growth potential and the land size of the property, i.e. is this a subdividable section or is there value left in the property which you can use to refinance later?
The current tax law allows that any losses generated against cash flow negative rental properties can be claimed against your personal income if structured correctly. This means that if your average tax rate is 33%, for every dollar of loss, you will get 33 cents back.
Morning Matthew, Quick note about Salesh Chand. I have been extremely impressed with his actions with regard to the mutual client of ours in Auckland Abrasive Blasting and Coatings 2005 Ltd. He has been a pleasure to deal with, provided accurate information in a timely manner and most importantly is giving the client the right advice as far as I am concerned. He is very personable and I would certainly recommend his services to any ANZ client. Kind regards - Grant Clune - ANZ Relationship Manager - Auckland South
Investing in residential property?
If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.
Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.