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Prime Minister Anthony Albanese’s recent $4.3m home purchase would deliver him a tax savings bonanza if he chose to rent the property out, economic modelling shows.
It’s a move the Prime Minister has been rumoured to be considering after he made it clear to reporters Tuesday that he was not planning retirement any time soon.
He also confirmed that he wanted to stay in his “current job for a very long period of time”.
2GB’s Ben Fordham revealed the sale earlier this week and claimed the PM exchanged contracts in September, with settlement expected before the end of October.
Mr Albanese snapped up the clifftop home in Central Coast suburb Copacabana for about $300,000 below the advertised price.
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The property is near the beach.
The listing said it was “within easy walk of the beach” and came with “uninterrupted ocean and Sydney skyline views from all levels”.
Mr Albanese told Fordham that he was about to start a “new chapter” with future wife Jodie Haydon and that it would be nice to be closer to her parents and family “one day”.
But speculation remains rife about his short-term plans for the Copacabana property given his residency at The Lodge and Kirribilli House.
It has been speculated that the Prime Minister may turn the property temporarily into a rental home while he remains in the country’s top job, although he has yet to confirm his plans.
Analysis from tax advisory group MCG Quantity Surveyors, which was not involved in the transaction, showed the Prime Minister would be able to write off tens of thousands of dollars off his tax bill were he to put a tenant into the property.
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Prime Minister Anthony Albanese said he was starting a new chapter with partner Jodie Haydon. Picture: Getty Images
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MCG calculated the likely amounts he would be able to claim against his taxes in various scenarios, revealing he’d be able to get up to $87,000 a year in negative gearing concessions.
Much would depend on how much money he borrowed for the purchase, what type of loan he used and whether he bought the property in his own name or via a trust.
Mr Albanese’s negative gearing clams would likely be controversial given he was the subject of much scrutiny in September when he confirmed that treasury officials had been seeking advice on potential reforms to the tax concessions.
The MCG modelling took into account the $1300 per week in rent the property was estimated to pull in based on an automated rental appraisal by CoreLogic.
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The PM would be able to make large tax claims if he rented the home out.
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It also factored in the Prime Minister’s reported annual salary and other known expenses on the property such as the nearly $5300 in annual council rates, plus likely property management fees, repairs and other holding costs.
These were contrasted with the typical interest rates being charged on mortgages by major lenders. Estimated depreciation was also included.
MCG’s analysis indicated that Mr Albanese would be able to get just shy of $87,000 in estimated tax savings if he used a 20 per cent deposit on the property and an initial interest-only period on the loan – the most common arrangement for Aussie investors.
Were he to have used a much larger deposit of 50 per cent – a more common occurrence for buyers of multimillion-dollar properties – his tax savings would be about $46,500.
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The PM secured the home for about $300,000 below the list price.
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Mr Albanese’s high purchase price means he would remain heavily geared even with an even larger deposit.
With a 70 per cent deposit on the price, he would still have a loan against the property of $1.29m.
That’s substantially more debt to potentially claim against his tax than most property investors.
MCG tax specialist Mike Mortlock said $600,000-odd loans tended to be the norm for Aussie investors.
It’s worth noting that it is not yet known exactly how much Mr Albanese used in deposit for the purchase or what interest rate he will be paying upon settlement.
While conceding he is “much better off”, Mr Albanese told reporters after news broke of his purchase that he knows “what it’s like to struggle”.
The property will allegedly settle later this month.
Mr Albanese said he had no plans to retire any time soon.
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“I have, of course, I am much better off, as a Prime Minister, I earn a good income,” Mr Albanese said.
“I understand that. I understand that I’ve been fortunate.
“But I also know what it’s like to struggle. My mum lived in the public housing that she was born in for all of her 65 years. And I know what it’s like, which is why I want to help all Australians into a home, whether it be public homes, or private rentals, or home ownership.”
The post Taxpayer bill for Albo’s $4.3m home revealed appeared first on realestate.com.au.
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