Do you own a negatively geared investment property?

Your employer is required to withhold tax during the year to cover your estimated tax liability from your employment income.

Those who have a negatively geared property investment will have less taxable income than their employer estimated due to their rental property loss offsetting their employment income.

In these cases, the employee does their tax and gets a tax refund for the overpaid tax at the end of the year.

Have less tax withheld from your pay

Many people like to get a big tax refund at year end, but why wait for your refund? Why not get it now? The Tax Office allows you to do just that.

You can lodge a Pay As You Go (PAYG) Withholding Variation which if accepted will direct your employer to withhold less tax from your pay and give more cash to you during the year.

This is an efficient tax strategy that can free up extra cash sooner to reduce debt, put into your offset account or invest more.

In particular people who have several properties which are significantly negatively geared may find it difficult to make ends meet if they don’t use a strategy such as this to manage their cashflow.

How to apply for the variation

Firstly you should discuss this option with your accountant to confirm that you are eligible and that this is suitable for you.

You can complete the electronic version of the form and submit it online for a quick assessment or you can print the form and mail it to the ATO which will take longer to assess.

Please call us on 1300 889 743 or enquire online if you would like to know further information about PAYG income tax withholding variation.

Get your figures right

The only trap is that you need to be accurate in your variation estimate otherwise you may have to pay penalty interest on the extra tax that you kept from the ATO.

You can usually make an accurate estimate using your tax return from last year combined with advice from your accountant.

Speak to an accountant

This information is general only and has been provided by Lucentor Pty Ltd who are accountants that specialise in tax for property investors.

We recommend investors obtain financial advice specific to their situation before making any investment or decision regarding their finances.

  • Marcus TP

    Interesting read here. Do you guys also have a page on a business loan to buy an insurance client book?

  • Hey Marcus, thanks for your comment. We have a page on insurance broking business loan and you can check it out here:

  • Ievers

    Hi, I already own an investment property but I’m now planning to turn my own house into an investment. Any thoughts / suggestions on this?

  • Hey Ievers, while you live in your home, you’re generally free of any tax consequences. If you sell it, you should get the principal place of residence capital gains exemption. While you own it, none of the expenses associated with owning the home are tax deductible. However, once you decide to rent it out the situation changes. You can find out about all this and more here:

  • Abby

    I find the info here quite useful. I’ll be buying another IP soon but not sure if it will be positively or negatively geared right now. Will contact you guys to help me secure finance for it :)

  • Hello Abby,

    You can simply use the investment property cashflow calculator to accurately predict the weekly cashflow position of your next investment property and find out if it will be negatively or positively geared. The instructions are on the page and you can enquire online through the page itself:

  • Abby


  • Wendt

    The property that I am considering for my second investment purchase has a stratum title. How much can the banks lend for this?

  • Hi,
    You can borrow up to 95% of the property value with an investment loan to buy a stratum title property. Do note that stratum title property are generally more complex to manage and aren’t as widely accepted by banks as security for a mortgage.

  • Ferguson

    I’m sorry this is not the section to ask this question but my cousin’s in the military and he was asking me to check if he can get a defence housing loan. It should be possible, shouldn’t it?

  • Hello Ferguson,

    Yes, however, it’s usually available to only those in the military who have both a high rank and salary. This is a great way for defence force personnel to own their first home as the loans are available at a heavily discounted rate. This government initiated loan is available through the Defence Housing credit union that has an agreement with one of the major banks.