Q Are the changes to the tax deductibility rules having a real effect on investors yet and how can investors prepare for the next round of tax bills?
A The short answer is “yes” – the interest non-deduction rules are affecting investors. At present only 50 per cent of residential rental property interest can be deducted as an expense, and this is hurting investors who are already paying higher interest costs and suffering negative cash flow from the increase in finance cost.
When you add inflation on food and living costs to this equation, it's a terrible burden and completely unfair. It will be even worse as the non-deduction rules are fully phased in over the next 18 months or so (no interest will be deductible from April 1, 2025 unless a property qualifies for exemption). To mitigate the adverse effects, some investors have already changed their strategy to investing in properties that are exempt from
