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How Smart Investors Use TAX To Pay for Their Properties

by | May 26, 2021 | Blog

Picture this: You’re a current homeowner looking to dip into the property investment market. 

Financially, you’re earning $100k a year and you know you will be able to purchase a property with the equity you’ve built up in your home, but you don’t have enough leftover in your regular pay packet to actually pay off that property long term. 

So how do people do it then? Is property investing only for the really wealthy with substantial income to spare? 

The answer of course is no – but the truth is you need to learn to do better with what you have. 


So where exactly is your money going right now? 

Of $100,000:

  • $9,500 goes to your super
  • $25,000 goes to tax 
  • $35,000 goes to your home (based on what the average Australian homeowner or renter spends on their home)
  • $30,500 is what you have left to live off of – covering your expenses like groceries, school fees, holidays etc.

When we break it down that way, it makes the prospect of property investing seemingly impossible.

That’s where tax claims and tax breaks become your biggest advantage. 



Let’s say you’re looking to buy a brand new investment property for $500,000. On that property you want to make sure it’s returning rent for around $500 a week – we call it a 5% rental yield. 

The challenge here is, if there was also an interest rate on that property of 5% and we had further expenses, it’s now actually costing us $601 per week to own. So, the rent of $500 coming in weekly still has us at a loss of $101 per week. 

However, the incredible benefit for you as a property investor is that you’re able to claim tax back and you get depreciation. 

So now on a brand new $500,000 property you can now claim tax back of $152 every week – without waiting until the end of the financial year to reap the rewards. With a PAYG withholding variation, you can receive the $152 tax break each time you’re paid. 

Where does this leave you?

While your output still stays at $601, your combined rent and tax coming in weekly of $652 means you’re now receiving an extra $51 in your pocket each week. 



The beauty of this benefit for investors is that you don’t have to draw on the money you use to live off every day. You draw on the money you already had, that $25,000, that was going to tax each year regardless. 

Are you going to let that all go to the ATO – or are you going to claim a bit of it back? Next time you’re wondering who is going to be paying for your investment property, remember the 80/20 percentage.

This is equation says 80 per cent of the costs and interest is covered by the tenants paying rent, and then 20 per cent comes from claiming tax back through a PAYG variation.

If you’d like to learn more about how this benefit can be put into practice for your personal financial situation, come along to one of our property investment nights. 

Our experienced team will show you exactly how to make the most of your money – especially the money you’re not even using. 


Spots are extremely limited so get in quick to secure a space today. Register here.


By Jason Whitton

Group CEO Positive Real Estate 

Wealth Strategist – Investor – Coach

Jason Whitton

Founder and Chief Education Officer