SearchIncome tax options?
Tanya asks:
(updated on Thursday, May 30th 2013)
I about to finish paying off my mortgage and will now be renting out this property to tenants and moving to another city with my partner. What tax will the rent come under? Are there other options to set this up so it is not income tax?
Our Experts Answer:
The rental income derived from the property is taxable income to the property owner. All costs associated with earning the rent become deductible once the property is available for rental. If you borrow money to buy a new personal home elsewhere you may like to consider a restructure of the old residence so that finance is arranged in such a way that interest is deductible. Remember that interest deductibility is not determined by which asset is mortgaged but rather by the use to which the borrowed money is put. I.e. A restructure would need to demonstrate that the borrowed money purchased the property being rented if an interest deduction is to be available to offset the rental income.
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