How much is your income lowered by neg gearing?

Now, I know this is a bit of a "how long is a piece of string" question, but, on average, how much is your taxable income being lowered by negative gearing?
I understand many on here are cashflow positive month to month, but I assume a lot are negative by tax time after all interest/expenses etc.
We haven't done a return yet as we only recently only purchased this financial year.
Im curious to know on average how much your IPs lower your taxable incomes, taking into consideration depreciation benefits etc

 

I pay about 10%.

 

Hi Otie,

After depreciation, fees and interest payments on 4 IPs plus depreciation for car we have altered my tax withholding so I'm only paying 8% tax throughout the year . Even though 3 of my IPs are cashflow neutral.

We do this to save waiting for a one off payment in July.

 

Thanks for the posts. Im just looking forward to our first tax return to see what to expect in the future. I much prefer the idea of paying into my own future than handing over to the tax man.

 

I am positively geared. I like investments to make money.

Each to their own.

 

I have been retired for 6 years. I (foolishly) thought that after the first year in retirement, all future year tax returns would basically be the same.

On no, how wrong I was. Super fund changes, tax changes, turning 60, a reno here and there, buying an IP that turned out cashflow neutral portfolio to severely negative, ... has meant that , in the last 6 years, each tax return has been significantly different.

Just means that I have to do tax planning with our accountant on an ongoing basis, just like we always have.

Sorry to burst your bubble .

 

Like twobobsworth, I pay about 10% in tax. Negatively geared with near neutral cashflow, excluding salary.

 

Even after depreciation ? I understand cash flow positive usually means after fees and interest have been deducted. But if depreciation is taken into account wouldn't most be negative? It's good as im making cashflow yet am not paying any tax on it

 

Thats the ideal sweet spot I'd love to be in... Swing in under $18k taxable income with a positive cashflow. Is that what you mean?

 

Yes. But every person has different goals, objectives and stress points. No judgement from me on anybody and I have been around for a bit longer than others.

The business generates the cash to invest carefully.

 

Not everyone chases income producing investments...there is merit in chasing capital growth.

One of my IPs has made an annual (income) loss of about $25k per year since 2011 providing me with a healthy negative gearing benefit and during the same period has seen CG of $700k. Personally, I couldn't give a toss about income with those figures.

 

WOW, that's amazing. Well done.

 

IP is in Sydney's inner west, which has experienced dramatically CG since 2010/2011. Those chasing rental yield will complain about the inner west, but CG is what I chase.

 

I agree, I'm in it for the next 40 years plus so chasing CG. Happy to see in the Herald Sun yesterday growth for the suburb we bought in has been $104 per day for the past year....I'd much prefer than than short term cashflow which I'd be taxed higher on anyway

 

How can you have such a large deduction when 3 properties are cashflow neutral? You must have a lot of "expenses"

 

Is this only possible because of depreciation? I don't understand how these posts state cashflow neutral / positive but still have the room for such large deductions.

 

Everybody is different.

I have not bought in Perth for 10 years and I am pleased I have not.

If you want CG you have to get the cycle right.

 

EVERY property is different and every investor portfolio is different. And even then each taxpayer has a different taxable income prior to net rental income.

Some taxpayers seek positive taxable income and some seek negative gearing. Some seek really large neg gearing. And negative gearing and cashflow arent always the same. Many aim for positive cashflow but seek negative gearing through depreciation etc

 

Positive Cashflow. CG on the rise. Properties all have good Depreciation being new or near new. Pay about 3% of measly PAYG in Tax.

 

Hi hodge, I'm not understanding that you pay 8% tax. Also @twobobsworth @Zoolander?
Are you guys saying that you're in a certain tax bracket, then after all deductions it brings you into a lower tax bracket?

Eg, your in the 32.5% tax bracket which means your earning between 37-80k a year, then after say 4 investment propertys Deductions which can total say 20-30k brings you down a tax bracket into the 19% bracket of 18-37k?