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Rate rise effect on IP casflow and tax return

Discussion in 'Real Estate' started by glennt, 11th Apr, 2010.

  1. glennt

    glennt Member

    Joined:
    24th Jul, 2009
    Posts:
    13
    Location:
    Adelaide
    Am I correct in assuming that if interest rates keep rising and if we can service our cash flow on our IPs then our tax return will be more.

    In another words is it correct to assume that everything is proportional with interest rate and tax return in relation to IPs?
    :confused:
     
  2. level3

    level3 Member

    Joined:
    12th Jun, 2009
    Posts:
    10
    Location:
    Syndey, NSW
    my take on it is that if the interest rates continue to rise, more interest is payable. If your IP is negatively geared, hence you are making a loss due to outgoings such as interest, you should be able to make a bigger deduction on your taxable income.. as long as you are able to service to loan.

    cheers.