Negative gearing calculator
Optimizing Your Tax Savings with Our Negative Gearing Calculator
Our negative gearing calculator is a powerful tool that can help you estimate the tax savings of your property investments. This also allows property investors to see the possible tax benefits of owning a negatively geared investment property.
Gather the necessary information
Input the necessary information
Once you have all the required information, enter it into our user-friendly negative gearing calculator.
Click "Calculate my Tax Savings"
After inputting all the necessary details, click the “Calculate my Tax Savings” button.
Review the tax deduction benefits analysis
Take Action and Maximize Your Tax Benefits
What is negative gearing?
By relying on borrowed money, you can acquire valuable investment properties.
When the total expenses, including loan interest, property management fees, and maintenance costs, exceed the rental income generated, it results in a rental loss—a condition known as negative gearing.
The primary objective of negative gearing is to utilize the tax benefits associated with this loss to potentially lower your taxable income, reduce your overall tax liability, and even secure a tax refund.
Earning a tax refund through negative gearing
s a result, you may qualify for a tax refund. If the total withheld, including PAYG Withholding tax and PAYG instalments, is more than your actual tax payable, you can receive a tax refund. In essence, negative gearing helps reduce the amount of income tax you have to pay and may even earn you a tax refund.
The Benefits Of A Negatively Geared Property
Negative gearing offers allows investors to deduct rental property expenses, such as loan interest and maintenance costs, from their taxable income. This reduces their overall tax liability and potentially results in higher tax savings.
Risks associated with investment property negative gearing
Negatively geared properties require ongoing financial commitment, as the investor must cover the shortfall between rental income and expenses from their own funds.
What you need for negative gearing to work
Adequate Rental Income
Effective negative gearing requires rental income and tax refunds to cover cash tax deductions (interest, expenses) for positive cash flow.
Long-Term Investment Horizon
Positive gearing benefits and tax considerations
How does negative gearing work compared to positive gearing?
Cash Flow – Positive gearing provides immediate cash flow through rental income, where the income exceeds the expenses. On the other hand, negative gearing requires additional funds to cover the ongoing expenses, as the expenses exceed the rental income (also known as summary rental income), resulting in a cash flow deficit.
Risk and Return – Positive gearing offers immediate income but may have limited capital growth. Negative gearing, while having potential tax benefits, allows for potential long-term capital gains as the property value appreciates over time.
Understanding these differences and considering your financial goals and circumstances can help you determine the most suitable investment strategy, whether it involves positive or negative gearing.
Discover if you Qualify for PAYG Withholding Variation
At TMS, we are committed to helping you navigate the complexities of property investment and maximize all of your possible tax benefits. Take advantage of our resources, expertise, and personalized services to make the most of your investment property. Contact us today to get started on your journey toward financial success.
In addition, please note that the results generated by our Negative Gearing Calculator are estimates based on the information provided. The accuracy of these estimates may vary depending on individual circumstances and additional factors not accounted for in the calculations. We recommend consulting with a qualified financial advisor or tax professional for a comprehensive analysis and personalized advice specific to your situation.