The information required is:
- Your taxable income as the benefit of negative gearing changes significantly with your income level.
- The cost of the property
- The loan amount
- The interest rate on the loan
- Expected long term (10 years) capital appreciation on the property. This information is used for calculating the number of year until the property is cash flow positive as rental increases will follow capital appreciation over the long term. The expected capital appreciation rate will be different depending on the type of property, its location and future economic conditions.
- Rental Income per week – How much gross rental you expect to receive each week.
- Number of weeks rented per year – The default will be 52 weeks, but it may be prudent to allow say 50 weeks for changeover between tenants.
- Annual Expenses – such as agents leasing fees, strata fees, council rates, repairs, insurance etc. Read more about what expenses you can claim.
- Depreciation – including the depreciation on the building, plant and fixtures. It can be estimated at this stage but for your tax return, you will require a quantity surveyors report. Depreciation on investment properties is often forgotten and as the negative gearing calculator will show you, it has a major impact on the holding cost of the property.
The negative gearing calculator will enable you to determine the effect of:
- Interest rate rises and falls
- Rent increases
- Changes in the gearing ratio
The negative gearing calculator will also enable you to compare the cost of different properties and show how much the Australian Tax Office will assist you in buying your property.
Disclaimer: Our negative gearing calculator is a guide only and should not be considered as investment advice. The calculator is not comprehensive and provides only a simple overview. The benefits of negative gearing may differ depending upon your individual financial circumstances. You should obtain advice from your accountant before purchasing a negative geared investment property.