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Yes I did. So far my tax has involved putting down my income and my youth allowance while at Uni. I'm glad there are helpful members here that have cleared up my misconceptions.
Thanks Derek, that seems a very simple way to think about it.
I think I need to do more research on positive cash flow properties. I can understand that you want to make gains on capital which can outdo the negative gearing loss each year. But what if the purpose is to have positive cash flow? Can this be achieved on a slightly negative geared property, after tax deduction on expenses are made? I thought I had read a book that said yes but maybe I had rose tinted glasses on.
Edit: I went back to the books and found that its only "on paper" losses (through depreciation of fixtures) that can swing the negatively geared property to have a positive cashflow. Probably not likely for me with a low tax bracket and low investment options to begin with.
Thanks for the reply.
You seem confused on my working, so I'll elaborate it a bit more.
Rent per annum = 275*52 = $14,300
Interest per annum = $11,960
Other costs per annum = $4,500
Cash flow before tax = 14,300-11,960-4500 = -$2160 (so this is my loss before applying tax deductions).
Based on your working, it seems I only apply the tax deduction to the amount lost ($2160), not the full expenses ($11,960 + $4,500).
Tax Refunded (at 37c bracket) = Neg geared amount * tax bracket = (2160)*0.37 = $799
Which makes the cost to hold $1361 per year (and makes me sad because I thought I had a positive cashflow before!).
In that case, why does the ATO website bother saying everything from agent fees to repairs and interest on borrowings can be claimed on tax? The only thing we have claimed here is the lost portion of these expenses.
I've also read about making positive cash flow from a negatively geared property. Is this actually possible?
