How to get the Tax man to fund your rental property and help you buy another

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A property investor’s best friend is cash flow, the more cash available the greater the ability to fund the existing investment properties and potentially add to your asset base by acquiring further investment properties.  How to get the Tax man to fund your rental property.

Under tax law, the Commissioner of Taxation may, to meet the special circumstances of a particular case, vary the amount an employer is required to withhold from a withholding payment (your wage or salary). The main purpose of varying your rate or amount of withholding tax is to ensure that the amounts withheld during the income year best meet your end-of-year tax liability. An example is where the normal rate or amount of withholding would lead to a large credit or refund at the end of the income year because your tax deductible expenses are higher than normal.

Robert owns a rental property. Robert’s annual gross income from his only employer is $75,000. He estimates that his rental property loss will be $15,000. Therefore, his estimated taxable income for 2015 will be $60,000 ($75,000 – $15,000). Robert can apply for a variation to have his withholding rate calculated based on his estimated taxable income of $60,000. This would mean over the 12 months Robert would receive a cash flow benefit of $5,100 or approx. $100 a week.

Start improving your take home cash flow:

  1. Go to the ATO website under PAYG withholding variation application 2015 and lodge a e-variation (processed within 14 days) or download the paper form.
  2. Or, to avoid mistakes and potential penalties you can seek professional help by contacting your Chan &Naylor Client Manager or the Chan & Naylor office that assists with preparation of your annual Tax returns and they can assist in preparation and lodge the variations on your behalf for a small tax deductible fee. (click here to contact us)

The granting of a variation does not mean that we have accepted the tax treatment of the income and deductions in your application and penalties may apply if you get it wrong. Your actual tax liability will be determined when you lodge your income tax return. Under tax law, you must keep records of your relevant income and expenditure for a minimum of five years. 


Related:  Hobart Rentals: Least Affordable in Australia

David Naylor

David Naylor

Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.

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