Move into 713 next door. A tenant covers most of your mortgage. ATO deductions go to your wallet each fortnight. Your Footscray equity keeps building.
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net weekly cashflow (everything — incl rent paid)
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CGT you avoid — 6-year rule
The cashflow in plain English
You move into 713 Buckley and pay $570/wk rent. Your 308 goes on the open rental market — a tenant pays you ~$440/wk. Your mortgage interest, body corp, council rates, insurance and depreciation all become tax-deductible now that 308 is an investment property. The ATO refunds that tax either fortnightly via your pay (PAYG variation) or at tax time. The 6-year CGT absence rule means 308 stays as your principal residence for tax purposes — sell within 6 years and all capital gains are completely tax-free.
How the tax mechanism works
Every expense on your IP — interest, body corp, rates, insurance — becomes a tax deduction. On top of that, depreciation is a paper deduction the ATO gives you for the wear and tear of fittings, carpets and the building structure. You spend no cash to claim it — a quantity surveyor visits once (~$500, tax-deductible) and produces a yearly schedule. At your tax bracket, roughly 32.5 cents per dollar of deductions comes back as a tax refund. Lodge a PAYG variation and that refund hits your pay fortnightly, not just at tax time.
Why the cashflow works in your favour
Five financial mechanisms that change once 308 is an IP
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Bigger apartment, same building
713 is bigger than 308 — same complex, same suburb, no commute change.
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A tenant covers most of your mortgage
Tenant pays ~$440/wk. Your mortgage repayment is ~$492/wk. The gap is small, and ATO deductions close it — money you were never getting as an owner-occupier.
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The ATO subsidises you
Interest, body corp, rates, insurance and depreciation are all deductible. At your tax bracket, roughly 32.5c per dollar of deductions comes back via your fortnightly pay.
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Zero CGT for 6 years
308 stays your PPOR for tax purposes for up to 6 years. Sell within that window and every dollar of Footscray growth is tax-free. Just do not nominate another property as PPOR.
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Equity builds two ways
Tenant rent pays down your loan. Footscray appreciates. You build wealth without spending more than you do now.
Why short-term cashflow is not the whole story
The weekly diff below is what the arrangement looks like in year 1. Rent grows ~3%/yr, costs grow slower, the loan principal pays down, and the property appreciates. The real return shows up over time — here is what the arrangement builds for you over 10 years:
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Total wealth built over 10 yrs
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Equity in 308 at year 10
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CGT avoided (6-yr rule)
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Year cashflow turns +ve
Before vs after — your weekly cashflow
What changes financially each week once 308 is an IP. Edit any number in the calculator below.
As your home (current)
Mortgage repayment
Body corp + rates
Rental income$0
Tax deductionsNone
Weekly cost of 308
As an investment property
Tenant rent (308)
Mortgage repayment
Body corp + rates
Insurance
ATO tax refund (in your pay)
Rent you pay (713)
Net weekly cashflow
Weekly diff vs staying as your home (includes rent you pay elsewhere)-
Your figures — edit anything
All numbers update live. Estimates pre-filled — update with your actuals.
Loan Structure
Owner-Occupied (current): Your loan today is an owner-occupier loan. If you switch to IP, banks typically reprice the rate up by ~0.5%. Toggle to see what rate would apply.
📋 Optimised defaults applied: refinanced rate 5.5%, proper QS depreciation report, top-of-market rents, $2k/yr accountant + records claims. Adjust any input if your actual figures differ. The page recalculates live.
Update with your actual balance
Market rate 1-bed Footscray
Apartments low maintenance — ~$10/wk reserve
VIC: apartments often $0 (under $50k threshold). Check assessment.
From QS report — paper claim only
Industry standard 4%: ~2 weeks/yr empty between tenants
Long-term avg ~3%/yr
Body corp, rates etc grow ~2.5%/yr
QS report (~$500), accountant (~$300)
Footscray 10yr avg ~6-7%
Where these rent figures come from: The $440/wk tenant rent for 308 and $570/wk for 713 are based on current market rates for comparable 1-bedroom apartments at 90 Buckley St, Footscray. Domain and REA listings for similar units in the complex and surrounding streets were checked. The IP rent must be at market — the ATO requires it for deductions to be allowed in full. You can adjust both figures above.
What is depreciation? A paper deduction the ATO allows for the wear and tear of fittings, carpets, appliances and the building structure over time. You do not spend any cash to claim it. A quantity surveyor visits once (~$500 one-off, itself tax-deductible) and produces a schedule showing what you can claim each year. It reduces your taxable income the same way interest does — but there is no cash outlay whatsoever.
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Weekly rental income
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Weekly diff vs as home
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Annual tax saving (after rent income)
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Weekly in your pay (PAYG)
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Tenant covers X% of mortgage
Annual Rental Position (Tax)
Rental income (taxable)
Mortgage interest (interest portion only)
Body corporate
Council rates
Landlord insurance
Land tax
Depreciation (paper claim — zero cash outlay)
Total annual deductions
Net rental loss (deductions − income)
Tax refund (or owed) at % bracket
The long-term picture
What 308 Buckley builds for you over time
Today
Year 3
Year 5
Year 10
308 Buckley value
Loan remaining
Your equity
Cumulative tax saved
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in capital gains tax you avoid if you sell within 6 years
ATO 6-year absence rule. 308 Buckley stays your PPOR. Every dollar of Footscray growth is tax-free. Do not nominate another property as PPOR.
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Estimated total wealth built over 10 years
Footscray growth + loan paid down by tenant rent + 10 years of ATO tax savings.
⚠️ PPOR designation rule
Only ONE property at a time can be your "principal place of residence" for tax purposes. The 6-year CGT exemption above assumes you nominate 308 as your PPOR for tax (even though you live elsewhere). If you nominate a different property as PPOR, 308 will be subject to CGT pro-rata on any gain. You can change designation later, but only one property qualifies for the exemption at any given time.
How the cashflow pays off 308 faster
Without IP cashflow you pay the standard repayment alone. With it, tenant rent plus the ATO refund frees up extra cash every month that goes straight back into the 308 mortgage.
Auto-calculated: extra monthly repayment = your weekly ATO refund (PAYG variation), converted to monthly. This is genuinely new cash created by the IP arrangement — without IP-ifying, the refund does not exist.
Without IP cashflow
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years to pay off 308
Monthly repayment-
Total interest paid-
Own it outright-
With IP cashflow redirected
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years to pay off 308
Standard repayment-
Extra from ATO refund-
Total interest paid-
Own it outright-
Without IP cashflow-
With IP cashflow redirected-
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years earlier you own 308 Buckley outright
Interest you never pay: - Tenant rent + ATO refund generates this — no extra cash from you required.
What needs to happen — 4 steps
Steps to make this real.
1
Sign a written lease at $440/wk
The ATO requires a written lease at market rent for deductions to hold. One page, signed. Without it, deductions can be reduced or disallowed. Whoever the tenant is — agent or private — get the lease in writing.
2
Lodge a PAYG withholding variation
One-page ATO form telling your employer to withhold less tax from each pay. Free, takes about 10 minutes online. Gets the saving into your bank fortnightly rather than waiting for tax time.
3
Get a depreciation report for 308
A quantity surveyor visits and calculates exactly what you can claim each year. Around $500 one-off, tax-deductible itself. The figure in this calculator is an estimate — the report gives you the accurate number.
4
Set up an offset account for the extra repayments
The payoff acceleration only works if the freed-up cash actually hits the mortgage. Ask your bank to open an offset account on your 308 loan and redirect the monthly saving straight in.