Tax, tax, tax – most of us shudder at the sound of it, despite it being an inevitable part of life. However, there are ways to reduce how much tax you actually pay in order to keep more cash in your pocket – the golden word – property investment

You see, owning real estate in Australia can be very tax effective. 

Before we go too far, I want to make it clear I’m not promoting negative gearing as an investment principle by itself. Any potential tax deductions are simply a bonus of owning property. Without the assurance of significant capital growth, buying a piece of real estate to deliberately lose money simply to get tax deductions, is not clever. 


I see deductions as a fringe benefit, not a fundamental principle. For providing property to the rental market, the Australian Taxation Office gives property investors a tax deduction. 

Real estate is a fantastic wealth-creation vehicle because there are two portions to it – the land and the building. While one goes up in value, the other goes down. 

So, when the building goes down in value and creates a paper loss, not only does it take no money out of anybody’s bank account, but the owner gets to claim that loss as a deduction. It means investors don’t have to lose money or have a negative cash-flow to get massive tax deductions. 


So, let me talk about tax first and put it in a way that will make more sense. 

You go to work a certain number of days a week for a certain number of hours, exchanging your time for money. It’s a system that’s been around for eons and is the quickest way to make money although you shouldn’t get stuck in that process if you want to build wealth. 


Of course, I don’t encourage anyone to quit their job until they actually are wealthy. It is hard to become a property investor with no income because nobody will lend you money. 

The trouble with the system is that when you break it down into its separate days, you’ll discover that every hour of work on both Monday and Tuesday – and, for some people, Wednesday as well – have benefited nobody but the tax man. 

You don’t get a cent of it. 


So, here’s the thing you need to know. If you have an income, PAYG, or are in business, the law states that as an investor you have the right to claim losses as tax deductions and reduce your tax legally when you invest in property. 

If the average Australian bought between three and five properties – the newer the better and the higher cash-flow the better – they could legally claim back 78 per cent of their tax for providing rental housing to the market. 

To put it more simply, the average Australian could actually claim back the money they earn on Monday, Tuesday and Wednesday. Even more simply: they can stop working for free! 


The tax system was created by wealthy people to be manipulated by rich people. However, the rules apply to everyone. 

There is indeed cash-flow to be gained from the tax system. The current system is a daily mugging for those who look at it as controversial and dismiss it. 

The masses are ignorant to the benefits of such cash-flow advantages of property. Unsubscribe to this school of thought or you will suffer tax prejudice forever. 


As you’re now aware, there are many ways that owning an investment property can minimise the amount of tax you are liable to pay. 

For a kick-ass investment plan that includes the right buying techniques, tax reduction and everything in between, join us for a free property investing seminar.

Our team runs these free real estate workshops to help investors build a well-rounded portfolio. Learn the secret language of property investment that will generate passive income for years to come. 


By Sam Saggers

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