Are these projections good or bad?

Hi all,

I'm looking at a property in Portside (Hamilton) Brisbane. 1 bed, 1 media room, 1 bath, 1 car. It will be rented out at $450 per week for at least 12 months and then within 12-24 months I will move in and it will be my personal residence. Until then I will continue to rent in Sydney at $460 per week.

I've done a negative gearing calculator and I'm trying to understand the appropriateness of the numbers for my situation. I'm still learning and want to get your opinions and a greater understanding of what these numbers mean for me in real terms. Is it saying that it will cost me $80 per week but that I'll be ultimately $5,244 per annum better off? I've attached the file showing the calculator.

Any guidance would be greatly appreciated.

 

That's NOT what it says.

It says that before tax, you are down $9,447 a year. After tax (that is, taking into account the tax benefit of negative gearing including depreciation), you are only down $4,202 a year. This seems to assume a 39% tax rate? Probably 37% + medicare levy (so assumes your other income is 120,000 to 180,000).

Think of it this way, you are down $9,447 in total throughout the year, then get $5,244 'back' from your tax return.

If you had no other income, you would be down $9,447 a year only.

 

OK great thank you. Income from work is $112K + super, and I guess it's the rental income pushing my taxable income into the 37% bracket. In terms of property investing how does that sit with you? Is it still "too" negatively geared to be comfortable?

 

No, this statement is wrong. For tax, rent is immediately cancelled out by deductible expenses. The projection is wrong for you because your marginal tax rate is only 32.5%. For you the net cost is likely higher than what that projection says. Maybe the projection is using old 2020 tax rates.

Not advice, talk to an accountant.

No idea, because I don't know what the property is. I don't evaluate a property solely on how negatively geared it is. Is land a bad investment because it has no rent? Who knows.