Gimee Gimee Gimee … More Real Estate Losses and Tax Deductions

Since we know that investors represent half the owners of NSW strata apartments (see post Whose in the Majority … Owners or Investors in Strata) they are an important stakeholder group and their positions and interests make a big difference to scheme operation.

In the whole investor owners exist for profit motives and the taxation benefits that are available to them.


In a recent article called View Deductions with Care in SMH Domain, John Collett explains how negatively geared property investment works and gives some salient pointers to what’s deductible and what’s not.

The ATO publish a lot of useful information for rental property owners at its website including this guide called Rental properties - avoiding common mistakes which is easy to understand and very helpful.

Interestingly, the article also says that the level of investor owner losses in Australia increased by 43% from FY2007 to FY2008 (from an average annual loss of $3,733 per property to $5,375 per property).  And, that in FY2008 investors reported tax losses totalling $8.6 billion.  That’s a big loss or losses !

I suspect that there will also be an increases in the level of investor owner losses in FY2009 and FY 2010.

That means that on a day to day cash-flow basis investor owners are worse off than before and, in strata, that means they are less able to pay levies on time (or at all) and more likely to want to find ways to reduce (or eliminate) scheme expenses.  This impacts on decision making, scheme operations, managers, scheme suppliers, etc.

Is this what you’re now seeing at the strata scheme level ?

And, remember that negatively geared investment is fundamentally about losing money to get the tax benefits against other income and (hopefully) offsetting the income losses by higher medium and long term capital gains (after GST).  

Francesco …