Property Investment Scenario
This investment scenario is based on a new average 3 bedroom house with double garage and two living areas. Below are the current financial year tax rates and an analysis of holding an investment property in its first year.

Tax rates 2009-10

Taxable income	Tax on this income
$1 – $6,000	Nil
$6,001 – $35,000	15c for each $1 over $6,000
$35,001 – $80,000	$4,350 plus 30c for each $1 over $35,000
$80,001 – $180,000	$17,850 plus 38c for each $1 over $80,000
$180,001 and over	$55,850 plus 45c for each $1 over $180,000

Property Investment Scenario
The following scenario assumes that a loan for 95% of the property value is taken out on a new house and land package. As you can see the stamp duty is only taken into account on the land price, which is a significant saving compared to buying an existing property.

This scenario was based on an income of $60,000 which is in the 30% tax bracket. As you can see it would cost around $2500 a year or $200 per month to hold this property at an interest rate of 6.21%. If you have an income in the 38% or 45% tax bracket then the holding costs would be considerably less. So as long as the property grows in value by at least $2000 (or about 1%) a year then you will make money. Well chosen property generally grows at around 7-10% a year.

New Property Information
Contract Price	$300,900.00
Land Component	$112,500.00
Building Component	$188,400.00
Fixtures and Fittings	$20,000.00
Repairs and Maintenance Allowance	$1,000.00
Weekly Rent	$280.00
Vacancy Rate	1.40%
Annual Rates	$1,000.00
Strata	$0.00
Land Tax	$0.00

Purchase Costs
State of purchase	SA
Stamp Duty	$3,267.50
Legal Fees	$0.00
Title Registration	$531.00
Conveyancing	$500.00
Depreciation Report	$800.00
Building Insurance	$350.00
Bank Costs
Loan LVR	95.00%
Mortgage Stamp Duty ($0 for FHB)	$878.00
Lenders Mortgage Insurance (est)	$5,115.30
Loan Application	$0.00
Package Fees	$340.00
Valuation fees	$0.00
Search Fees	$16.80
Registration of mortgage	$108.00
Interest During Construction (estimate)	$4,378.32
Loan Information
Required Loan Amount	$290,970.30
LVR after LMI Capitalised	96.70%
Loan Interest Rate	6.21%
Required Deposit	$21,836.30
Yearly Interest	$18,069.26
Monthly Interest	$1,505.77
Property Management Fees
Commission at 8.8%	$1,263.34
Letting Fee (2 Weeks Rent)	$560.00
Advertising Allowance	$250.00
Monthly Statements x 12	$72.00

Income
Salary	$60,000.00
Rental Income (Based on vacancy)	$14,356.16
Holding Costs
Interest	$18,069.26
Rates + Taxes	$1,000.00
Body Corp	$0.00
Repair/Maintenance Allowance	$1,000.00
Property Management	$2,145.34
Yearly Holding Costs	$22,214.60
Depreciation
Building (2.5%)	$4,210.00
Fixtures and Fittings	$3,200.00
Borrowing Costs (over 6 years)	$2,111.24
Total Deductions	$31,735.83
Gross Income	$74,356.16
Total Deductions	$31,735.83
New Income	$42,620.33
Tax Payable Without Property	$12,749.55
Tax Payable With Property	$7,275.25
Tax Savings	$5,474.30
Rental Income	$14,356.16
Actual Holding Costs	-$2,384.14
Monthly Holding Costs	-$198.68