Can someone who doesnt work but owns an investment property still get tax benefits?

Question

my parents own an investment property. my dad works, my mum is on a disability pension. they just did the first tax refund since building the house. dad got back a total of $3,800 and mum got nothing. the tax agent said she doesnt get her 50% as she doesnt work. this doesnt seem right to me, she is missing out and getting nothing but the loan is in both names. also, the property cost $229,000 shouldnt they have got more back, given the interest alone they have paid is $10,000? and the depreciation on the stove, carpets etc? also, they should have got 5% toward cost of building? plus rates and taxes, legal fees, house insurance etc? it doesnt seem to me as if they got enough back and mum got nothing! does this seem right? what more would they be entitled to? they arent coming out ahead at all, more like a loss to me!! should they enquire about the refund? have it reviewed? does this sound right to you? we are in australia

Answer 1

Unfortunately in Australia this is right.

Because your mum doesn't pay tax she has nothing to claim deductions against. Also has she told Centrelink she owns an investment property? She should do this soon so they can adjust her payments.

You cannot claim the cost of the property only any improvements you do to it. The deductions will go against any rent you received from it e.g. If you get $1 a week for the property (this is classed as income) & pay $0.50 for a new stove (this is a deduction) you will only have to pay tax on $0.50 left over. Any rent you earn from this property is classed as income on which you must pay tax.

In the long run having an investment property is a good thing as this is saving for their retirement.

Answer 2

You should talk to a real estate attorney. A real estate attorney would know these laws and would be able to give you the proper advice. You should also consult with a tax attorney and even an accountant. They would know the laws and help you. I do not know the laws in Australia, but being from the states, and I don't know if the law would be the same in Australia, but anyway in New York, a person on disability usually does not get a good tax break, and someone on disability, workers compensation, and so forth will not be entitled to tax returns or financial things that working people would be entitled to. A friend of mine, for example, who is on disability  and another on workers compensation, both cannot get the tax returns they both would have been able to get if they were working, even regardless of their resources. Also, neither one of them will be granted a mortgage loan regardless of their assets or resources because today a bank goes strictly by working income and assets do not count in most cases. Speak to a lawyer. Good luck.