300K loan at 6% equals 18K Interest Only repayments
Holding Costs - allow for 6K ( 10% property management, rates, insurances, 10% NRAS compliance fee , rates etc)
Total cost to own the property = 24K
rental Income 180 per week ( i assume this is the discounted NRAS rent?) = $9360 per year.
Deductible Loss of $14,640 plus depreciation of lets say approx 8K.
Total deductible Loss of $22,640
At 34% MTR (32.5% plus medicare) I get a refund of $7697.60 plus $9981 NRAS . Thats a total of $17,678.60. My holding costs are $14,640, so this would get me $3038.60 CF +
At 38.5% MTR (37% plus medicare) Id get a refund of $8716.40 plus $9981 for a total of $18697.40. That would leave me $4057.40 CF+
Not a very good example. The rental on a 300K property shouldnt be anything like $180 per week, even if a 25% QAHC discount is applied. If that's accurate, the rental yield is really really weak. NRAS at 300K and an interest rate of 6% should be yielding at least 5.5K CF+ or higher depending on Marginal tax rates.
Here's an example of what a good 300K NRAS deal should look like. 300K property that normally rents at 300 per week. Under NRAS it gets 240 per week. We could use all the same ownership costs, but less expensive NRAS models have 30% lower Property Management fees and NRAS compliance fess, so Im taking 1K off the 6K ownership costs, because Qld consortiums are just too expensive! 10% here. 10% there. So in this example, interest is 18K and costs are 5K. 23K total cost.
Rental Income is 240 per week after NRAS discount, so $12,480 per year.
Out of pocket costs /Deductible loss is $10,520. Depreciation is 8K.
Total deductible loss is 18,520
@ MTR 34% I get $6296.80 refund plus $9981. = $16277.80. Out of pocket costs were $10,520 so I get $5757.80 CF+ instead of the $3038.60 on the property you have proposed.
@ MTR 38.5% I get $7130.20 plus $9981= $17111.20 . That leaves me $6591.20 CF+ instead of $4057.40 on the property you have proposed.
Over 10 years that's alot of difference, especially when you consider the compund effect it has when you use it towards paying down non deductible debt.
I'd rather have $6591 available to pay off my mortgage in a lump sum each year , than $4057. The extra 2.5K per year will save me at least an extra 40K in interest over 10 years, so its really worth about 65K to me.