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Investment property strategies

To make the most of your property investment, consider a range of property investment strategies.

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Positive cash flow

You have a positive cash flow property when the income from your property (the rent) is more than the costs of holding the property (including things like the mortgage repayments and maintenance). 

The pros

  • Profit - the difference between the income produced by the property and the costs of holding the property
  • No out-of-pocket expenses
  • Positive cash flow properties can often be cheaper to buy, which means you pay less in stamp duty and taxes

The cons

  • You must pay tax on the profits you make
  • To find a positive cash flow property, you'll probably have to look for properties in areas that provide less growth potential than a negative cash flow area.

Negative cash flow

You have a negative cash flow property when the expense of holding the property is more than the income made from the property.

Example: if your annual rental income is $40,000, and the annual cost of holding the property (maintenance, mortgage etc.) is $50,000, you have a negative cash flow of $10,000. 

The pros

  • You can claim any losses your property has made ($10,000 in the example above) to reduce your taxable income
  • If you choose wisely, your negative cash-flow property can produce more capital gains over the term of the loan than what you pay in out-of-pocket expenses
  • As you pay down the loan, and inflation increases rental prices, your investment may eventually turn into a positive cash flow investment.

The cons

  • You'll need to cover the difference between what you make as income and what the costs are (in the example above, that would be $10,000 in one year)
  • It's a more volatile strategy –interest rates may rise and increase your out-of-pocket expenses


Negative cash flow isn't the only way you can get a break at tax time. Depreciation should also be a crucial part of your property investment strategy.  It could be the difference between just a negative cash flow property and a negative cash flow property that generates an income for you.

What is depreciation?

Depreciation is the estimated decrease in an asset’s value over time. It’s an expense that you can add to your total expenses of holding the property, increasing your total tax deduction, therefore increasing your tax refund.

The Australian Tax Organisation (ATO) has lists on all the items you can claim depreciation on and for how long. For example, the free standing garden shed in the backyard can be claimed for 15 years, and the carpet in the bedrooms can be claimed for 10 years.

Money for nothing

If you have bought an older house that you plan to renovate before you rent out, be sure to tell your accountant about everything you remove. You can claim the dirty old carpet you want to rip out and the dusty old curtains you’ve removed, even though you’re discarding it.

How to claim depreciation

A qualified quantity surveyor should be able to inspect your home and prepare a report for your accountant.

If you don’t want to wait until tax time to claim depreciation, you can apply for PAYG Withholding Variation so that your employer applies an adjusted tax rate to you every payday. That means more money in your pocket on payday instead of having to wait until tax time.

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This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement before making any decision regarding the product. Contact us 13 11 75 for a copy.

Banking products are issued by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document, Lending Fees and Charges and the Home Package Plus terms and conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.


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We’ll reply within two hours or by the next business day.

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