If cash was the king where’d you put it?

hi marc,
thanks for your explanation. i still understand it a little different.

lets base this senario on a wage of, lets say $60,000 with a flat tax rate of 30%. [ even though it is not right because of the sliding tax scale, but just to simplify it a bit ].

tax to be paid would be $18,000.

$170 p/w rent =$8,840
this would give a new taxable income of $68,840.

to come off this amount would be your deductions [ costs,depreciations,etc ].
$200 p/w=$10,400.
20% of rent for holding costs=$1,768.
2.5% of $100,000 for depreciation=$2,500.
total=$14,668.

$68,840-$14,668=$54,172 
 new taxable income=$54,172.
tax paid should have been $16,251.

$18,000-$16,251=$1,749.

tax return = $1,749.

now, next step,

property income = $8,840.
property out of pocket costs = $12,168  being for interest & holding cost. [ depreciation is not directly ouy of pocket ].

sub total, out of pocket expense for property = $3,328.
take tax return $1,749 ,off  this expense $3,328 = $1,579.

now ,total out of pocket expense for property , after tax is $1,579 = $30 p/w.

i would now think this property is neg-cash flowed by about $30 per week.

i would like to know if these calculations are wrong in any way.
it would help my learning & understanding of the tax system.

please reply marc ,or anybody else who may be able to comment.
 
many thanks,
bicky.