Interest Deductibility Limits Kick In Next Month | Impression Real Estate
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Interest Deductibility Limits Kick In Next Month

Posted by Impression on 26, Aug 2021

From October, your rental property interest payments are no longer 100% tax deductible.

Starting next month, the interest deductibility will be phased out over the next four years. This could have a significant impact on the equations for your rentals – a cashflow neutral property may now cost you money, for example.

“It’s definitely time to review your portfolio,” says Michael Cave, Financial Advisor and director of Cave Financial. “Don’t just look at it from a tax point of view, you’ve also got rising interest rates on top.”

Some investors are selling up completely and putting their money into managed funds, says Cave, while others are selling older properties and buying new builds as a kind of portfolio reset.

“I recommend doing some scenario planning – if you hold or sell, what might happen? We do financial modelling including all our clients’ investments, budgets and options, so it can get really complex. Then they can clearly see what would probably happen if they made this choice, or that choice.”

Remember that all Impression clients have a free hour of financial advice with Cave Financial each year – get in touch to book yours and find out whether you’re on track for 2022.

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