TAX ESSENTIALS FOR PROPERTY • STEP 1 OF 4
Get Ready: Property Tax Basics
Don't wait to buy real estate. Buy real estate and wait.
Will Rogers
Learn how negative gearing, depreciation, and CGT work for Australian investment properties.
Your Learning Journey
Your Learning Journey
This Step Takes: 20 minutes
Explore negative gearing, discover depreciation magic, and understand CGT on property sales.
Why This Matters
Property investors who understand these three concepts save $5-15k per year in tax. Most investors miss depreciation entirely. That's thousands left on the table.
Understanding property tax saves $5-15k yearly.
Negative Gearing Explained
Most Australian investment properties are negatively geared. Here's what that actually means.
Budget 2026-27: When did you buy this property?
Property & Loan
Total cost base: $730,000
Loan: $560,000
Rental Income & Your Tax
Annual: $30,000
4.46%
2.91%
Annual Expenses
Annual Cash Flow Breakdown
Negatively Geared
$191 /week
after-tax holding cost
Pre-tax cash shortfall
−$14,600/yr
Tax saving
+$4,672/yr
Net annual cost
−$9,928/yr
Full DeductionApplies to you
Bracket breakdown
Ring-Fenced (Post-Budget Established)
This property costs you $191/week after tax. The strategy works if the property value grows faster than your net losses.
Educational purposes only. Tax saving calculated using incremental bracket-stacking (ATO 2024-25 brackets + 2% Medicare levy), not a flat marginal rate. Budget 2026-27 negative gearing restrictions apply from 1 July 2027 for established properties bought after 12 May 2026. Transition relief applies if purchased before 1 July 2027. Pro-rata days-based apportionment for assets straddling the cutoff follows ATO draft guidance. Actual outcomes depend on your full tax situation. Consult a registered tax agent.
When It Works
Property in high-growth area, you have stable high income to offset losses, and you can hold 7-10+ years for capital growth to compound.
When It Doesn't
Low/no capital growth area, you can't afford the ongoing losses, or you need to sell within 3-5 years before growth covers your losses.
Depreciation: The Hidden Deduction
Depreciation lets you claim the wear and tear on your property as a tax deduction, even though you're not spending money.
In Simple Terms:
Your property wears out over time. The carpet gets old, the dishwasher breaks, the paint fades. The ATO lets you claim this "wear and tear" as a deduction each year, even though you haven't spent any money yet. It's like a free tax deduction! You need a depreciation schedulefrom a quantity surveyor to claim it.
Building (Capital Works)
40 years
Common items:
Plant & Equipment
5-15 years
Common items:
Example: $600k Investment Property
A depreciation schedule costs $600-800 but saves you thousands per year. Best investment property owners make!
⚠️ Important:
- • Depreciation only applies to the building and fixtures, not the land
- • Properties built after 1985 qualify for capital works (building) depreciation
- • Second-hand plant items (if property bought after May 2017) have limited deductions
- • You need a quantity surveyor's report to claim depreciation officially
CGT (Capital Gains Tax) on Property
When you sell an investment property for more than you paid, you owe tax on the profit. Here's how it works.
Example: Property Sale CGT
The 50% discount saved $37,000 in tax!
Tax-101 for Property - Get Ready: Complete
- Negative gearing lets you deduct property losses from your income, reducing tax while you wait for capital growth
- Depreciation is a 'free' deduction worth $3-10k/year. Get a quantity surveyor's report ($600-800) to claim it
- Hold property 12+ months to get the 50% CGT discount. This can save $20-40k+ in tax when you sell
Homework
Do you currently have an investment property? Are you claiming depreciation and tracking all deductible expenses?
If you own investment property, call a quantity surveyor this week to get a depreciation schedule. Cost: $600-800. Annual tax savings: $3-10k.
What's Next?
20 minutes