Can I offset rental losses?

Walter is reviewing his assets prior to the threshold changes and would like to know more about how his investment property will be assessed, and whether or not he can offset losses.

Q. Walter
Can you clarify how assets affect Age Pension payments? To be specific, in relation to property that carries a mortgage – is the value considered on the basis of the value of the property, less the outstanding mortgage? Does this apply to both the family home in the same way as a rental property? 

A. In respect of rental returns, is the value of rent monies received as income offset by all costs for the property (i.e. both interest and other costs) in the same way as applies for taxation purposes? And, if this amount is in the negative, is an offset against other income (e.g. part-time work) applied?

The full value of your principal residence is excluded from the asset test, regardless of whether you have a mortgage on it or not. In regards to an investment property, Centrelink will make an allowance for any loan against the property and also take into consideration the actual percentage of the property you own.

In regards to rental properties, Centrelink does not allow the same deductions as the ATO. Your assessed rental income will be the gross income received, minus maintenance costs, interest payments and rates. If you are in the negative once these deductions are made, you will be considered to receive no income from this property. Centrelink does not allow you to offset any losses against other income.

Related articles:
Is property a good investment?
How will I be assessed?

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