Exclusive Tools for Property Investors
Learn how you can maximise your borrowing power and achieve your investment goals faster!
Our Investment Property Calculator will enable you to do a high-level feasibility study of your target scenario. Understand your key costs and forecast your predicted cashflow.
Unlike other property analysis tools this calculator allows you to specify several important factors, run multiple scenarios and save your results for future reference.
Lender Policy Overview – Investment Lending
There are some restrictions in terms of acceptable property types. Generally, Lenders will accept standard houses & units, townhouses or land and construction.
Dependant on the location of the property, Lenders may reduce the amount they are prepared to lend against the security and generally a unit will need to be at least 50m2.
Many lenders will reduce the amount they will lend against the property for investment lending based on their assessment of the greater risks involved.
LVR’s can also be reduced for investment loans for factors such as Interest Only repayments, high density units, large loan sizes and where the borrower is seeking to capitalise Lenders Mortgage Insurance (LMI).
Most lenders will take into account negative gearing deductions when assessing the borrowers servicing capacity and the borrowing is in individual names (not company or trust).
Negative gearing benefits can also be split between borrowers in the affordability calculation based on the ownership percentage of the property.
When assessing your capability to make repayments Lenders will apply a percentage discount/shading to the rental income to allow for contingencies such as rental vacancies.
Rental income is generally assessed at around 70 – 80% however different percentages may apply based on the location and property type. Holiday accommodation/Airbnb properties will also be assessed at a lower percentage.
Investment interest rates tend to be higher than owner occupied home loans as investors can have a higher perceived risk than borrowers who plan to live in their property.
Some Lenders will also apply a higher rate to the loan where the borrower is seeking Interest Only payments.
Key Taxation Considerations
Negative gearing occurs when your total loan interest and running costs exceed the rental income from your investment property.
Any rental loss you incur during the financial year can be offset against income you earn and therefor reduces your tax liability. The amount you can claim is subject to your tax bracket and the percentage of the property that you own.
The ATO allows you to claim depreciation for wear & tear on the property inclusive of fixed items as well as removable fixtures and fittings such as blinds and ceiling fans.
Deductions are generally able to be claimed over a 40-year period at 2.5% per year. (If your property was constructed before 15 September 1987). Plant and equipment assets that cost $300 or less can be depreciated and claimed as deductions in their first year of usage.
At a high level, to calculate how much Capital Gains Tax (CGT) you’ll pay – take the property sale price and subtract its purchase price and related expenses (like legal fees, stamp duty, etc). The remaining amount is your capital gain. The tax rate paid on this gain is the same as your personal income tax rate for that year.
How long you held your investment property is relevant because if you’ve held it for over 12 months, for example, you can usually get a 50% discount on your capital gain. CGT is generally not payable for a property acquired before 20 September 1985.
Income records such as a statement from your property or managing agent, a rent book or bank statements that shows the rental payments going into your account
Expense records such as such as loan bank statements showing the interest charged, land tax assessments, receipts for running costs, depreciation schedules & capital works receipts and travel expense documents.
You will need to advise your lender if there is a loan on the property – investments loans may have different rates and fees.
You can claim deductions with the Investment Property, but Capital Gains tax may be incurred if you decide to sell the property.
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