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Most rental property owners I speak with are doing the basics right.They’re claiming the interest, the rates and the agent fees.
But there is often a gap between:
Claiming what you’re entitled to and structuring things so they work harder for you.That gap is usually worth more than people expect.Rather than speaking in general terms, let’s walk through one worked example.
This is intentionally simplified real life is more complex but it shows how a few deliberate decisions can stack together.
| Position | Amount |
|---|---|
| Taxable Income | $150,000 |
| Income Tax | $36,838 |
| Medicare Levy (2%) | $3,000 |
| Total Tax Payable | $39,838 |
This is the starting point.
Now let’s layer in a negatively geared investment property.
Running a property at a loss is not the goal.
But where the numbers naturally fall that way, the loss may reduce taxable income.
| Income / Expense | Amount |
| Rent Received | $40,000 |
| Less: Interest | – $38,400 |
| Less: Council & Water Rates | – $4,000 |
| Less: Agent Fees (7%) | – $2,800 |
| Less: Insurance, Repairs & Other | – $4,800 |
| Net Rental Result | – $10,000 |
Approximate tax saved at a $150k marginal rate:
So far, nothing unusual. A $10,000 rental loss creates roughly $3,900 of tax savings.
Now let’s look at where deliberate planning starts to matter.
This is usually the most important decision because it happens upfront and affects every year afterwards.
Rather than using cash savings, some investors may purchase using equity released from their home.
Property purchase → $800,000
Funding:
Approximate additional deductible interest each year compared with a standard 80% loan.
Borrowed funds used for income-producing purposes may become deductible.
Cash contributions generally do not.This strategy depends entirely on personal circumstances and should be considered before purchase.
Certain expenses may be prepaid before EOFY to bring deductions forward.
Examples:
Additional deductions brought into this year.
(Example: 6 months of prepaid interest + approximately $3,000 of prepaid expenses.)
This affects cash flow. You are paying real money today to accelerate deductions. This can be useful during unusually high-income years — but only when planned properly.
A Quantity Surveyor’s Report identifies depreciation deductions available.
Typically including:
Capital works (building structure)
Plant & equipment
(appliances, carpets, fixtures)
Illustrative non-cash deductions:
It’s often one of the few deductions already built into the asset. No additional spending required. For newer or renovated properties, the impact can sometimes be meaningful.
| Step | Amount |
| Starting Income | $150,000 |
| Loan Structuring | – $12,000 |
| Prepayments | – $28,200 |
| QSR Depreciation | – $6,000 |
| Revised Income | $103,800 |
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This example is simplified to show how different levers interact. It is not a prediction of your outcome. Loan structuring and prepayment decisions depend heavily on:
Bringing deductions forward means spending money sooner. Professional advice matters.