No doubt you have heard this statement from well-meaning friends when the topic of owning rental property comes up in discussion.
What some well-meaning people don’t really understand is that just because something is tax-deductible, it doesn’t necessarily mean a benefit. One still has to have income against which to make the claim.
It’s a bit like saying “Oh good, the price of petrol just went up to $4 a litre, I’ll get a higher tax deduction!”
Property Investment does give some helpful tax breaks, and wise investors will make every use of every deduction available. Often a cash flow negative property can be turned into a cash flow positive property by use of the various deductions available for depreciation and building allowances where applicable.
In my opinion it is not wise to make an investment for the sole purpose of gaining a tax deduction. Take the long term view and work closely with your accountant or financial advisor before making any investment.
