Get the Finder app 🥳

Track your credit score, free

Free

How property investors can use a PAYG withholding variation

A PAYG withholding variation can help boost your investment property cash flow.

Updated

Fact checked

A series of sheets and a calculator

It’s always nice to get a tax refund at the end of the year, but it can be tough waiting for that money to come through. That’s particularly true if you own an investment property and have to bear the expenses that come along with it. This is where a PAYG withholding variation can be a great strategy.

What is a PAYG withholding variation?

Throughout the year, your employer withholds a part of your income to pay your tax debt. At the end of the year, your tax return helps determine whether your employer has correctly estimated your tax liability for the year. If they’ve underestimated your tax liability, you’ll end up owing money to the Australian Taxation Office (ATO). If they’ve overestimated it, you’ll end up with a refund.

The tax withheld from your PAYG income is often an overestimation of your tax liability. This is because your employer doesn’t know all the deductions you’re eligible to claim. If you’re a property investor, there are a number of deductions you can claim that will significantly boost your tax refund at the end of the year.

A PAYG withholding variation allows you to reduce the amount of tax being withheld from your pay in order to better reflect these deductions. It’s basically like getting your tax refund early in the form of higher take-home pay.

Why would I use a PAYG withholding variation?

A PAYG withholding variation can help boost your cash flow as a property investor. This can be important given the cost of holding and maintaining an investment property.

As a property investor, you’ll run into a variety of expenses. In addition to your home loan repayment, you’ll also have expenses for maintenance, repairs, property management fees, insurance and council rates. Fortunately, you can deduct all these expenses, along with the interest charges on your home loan. You can also use the depreciation of the building and any items you’ve purchased for the property to further boost your deductions.

All these deductions can add up to a hefty tax refund. However, if you wait until the end of the year for your tax refund, you could run into some serious cash flow problems.

Your income from an investment property is usually limited to the rent you collect, any water usage charges passed on to your tenants and any insurance claims that are paid out during the tax year. Your expenses can often exceed this income. If you’re in a situation where the expense of holding and maintaining your investment property is greater than the income it generates, your property is said to be negatively geared.

Fortunately for property investors, negative gearing tax rules dictate that you can deduct any loss you realise on an investment property from your personal income. You can either do that by filing your return at the end of the year and waiting for a refund, or you can apply for a PAYG withholding variation and see tax benefits right away.

Because you’re likely to have a significant amount of deductions, your employer is likely to overestimate your tax liability. By applying for a PAYG withholding variation, you can reduce the amount withheld, boost your take home pay and help ease the financial burden of owning your investment property.

How to maximise your tax return as a property investor

How do I set up a PAYG withholding variation?

You can apply for a PAYG withholding variation directly with the ATO here. You can either fill out an electronic form and submit it online or print the form, fill it out and mail it to the ATO.

However, before you apply, you should discuss your situation with an accountant. Remember, if you overestimate the amount of deductions you’ll be able to claim, you’ll end the tax year on the hook for a debt to the ATO. A property tax specialist can help you figure out exactly how big a variation to apply for.

You’ll also want to speak to a depreciation specialist. A depreciation schedule can give a serious boost to your deductions, so it’s worth having one prepared before you chat to your accountant.

Property investment is usually a long-term strategy that involves holding a property for a number of years to build up capital growth. PAYG withholding variations allow you to pursue this strategy in the long-term without being too much out of pocket over the short term.

Start your property investment dreams with an investment home loan

Data indicated here is updated regularly
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
UBank UHomeLoan Variable Rate - Discount Offer for Investor Variable P&I Rate
2.89%
2.89%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Athena Liberate Home Loan - 70% to 80% LVR Investor, P&I
2.94%
2.87%
$0
$0 p.a.
80%
A competitive investor variable rate that falls as you build equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
homeloans.com.au Low Rate Home Loan with Offset - LVR 60% to 80% (Investment, P&I)
2.69%
2.71%
$0
$0 p.a.
80%
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier, P&I)
2.49%
4.12%
$595
$0 p.a.
90%
$2,000 refinance cashback
Investors can take advantage of a short term fixed rate with no ongoing fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
UBank UHomeLoan - 1 Year Fixed Rate (Investor, P&I)
2.29%
2.84%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
Athena Evaporate Home Loan - 60% to 70% LVR  Investor, P&I
2.89%
2.83%
$0
$0 p.a.
70%
This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
ME Flexible Home Loan With Member Package - LVR ≤80% $400k up to $699,999 (Investor, P&I)
3.13%
3.57%
$0
$395 p.a.
80%
Package loan for investors making principal-and-interest repayments. Low fees and 20% deposit required.
Well Home Loans Balanced Fixed Home Loan - 3 Year (Investor, P&I)
2.44%
2.76%
$250
$0 p.a.
90%
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
Pepper Money Essential Prime Full Doc Home Loan - LVR >75% up to 80%
3.09%
3.29%
$599
$10 monthly ($120 p.a.)
80%
This is a competitive, flexible variable rate suitable for borrowers with a good credit history. Borrow up to 80%.
Athena Celebrate Home Loan - 60% LVR  Investor, P&I
2.79%
2.79%
$0
$0 p.a.
60%
Investors with large deposits can get this low variable rate. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
Well Home Loans Balanced Variable - LVR 80% (Investor, P&I)
2.82%
2.85%
$250
$0 p.a.
80%
If you're an investor with a 20% deposit saved you can get this low rate mortgage. Not available for construction.
IMB Fixed Rate Home Loan - 3 Years Fixed (LVR ≤90% Investor, P&I, NSW and ACT borrowers only)
2.64%
3.56%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. A 3 years fixed rate investor which allows extra repayments to be made.
Well Home Loans Balanced Variable - LVR 90% (Investor, P&I)
2.82%
2.85%
$250
$0 p.a.
90%
Competitive variable investor mortgage to fund your property portfolio. You can add a 100% offset account for just $10 a month. Not available for construction purposes.
UBank UHomeLoan - 3 Year Fixed Rate (Investor, P&I)
2.29%
2.74%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
ING Orange Advantage Loan - $150k to $500k (LVR ≤ 80% Investor, P&I)
3.24%
3.57%
$0
$299 p.a.
80%
Investors can enjoy a 100% offset account, a redraw facility and flexible repayments.
UBank UHomeLoan Variable Rate - Investor Extra Offer Investor Interest Only
3.29%
3.16%
$0
$0 p.a.
80%
Pay interest only repayments with this special offer for investors.
ME Basic Home Loan - LVR ≤ 80% (Investor, P&I)
3.28%
3.30%
$0
$0 p.a.
80%
A no frills home loan for investors.
Athena Variable Home Loan - Investor, IO (*now 3.09%, drops to 3.04% on 30 Sep)
3.04%
2.93%
$0
$0 p.a.
80%
A competitive interest-only investor rate with no application or ongoing fees. Requires a 20% deposit. This rate will drop to 3.04% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.
UBank UHomeLoan - 1 Year Fixed Rate (Investor, IO)
2.44%
2.85%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
Pepper Money Essential Prime Alt Doc Home Loan - LVR up to 55%
3.85%
4.04%
$599
$10 monthly ($120 p.a.)
55%
A competitive rate home loan with an offset facility for self-employed borrowers.
ME Flexible Home Loan Fixed - 1 Year Fixed Rate (Investor, P&I)
3.04%
4.90%
$0
$0 p.a.
80%
Lock in the rate on your investment loan with one year. Requires a 20% deposit.
UBank UHomeLoan - 5 Year Fixed Rate (Investor, P&I)
2.74%
2.83%
$395
$0 p.a.
80%
Lock in a 5 year fixed rate on your investment loan and pay no ongoing fees.
loading

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details and get a free consultation with an expert broker from Aussie.

By submitting this form, you agree to the Finder Privacy and Cookies Policy and Terms of Use

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2020 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the Aussie privacy policy.

After entering your details a mortgage broker from Aussie will call you. They will discuss your situation and help you find a suitable loan.

  • A comparison of home loans from multiple lenders.
  • Expert guidance through the entire application process.
  • Free suburb and property reports.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 8 years running (2013-2020)

Image: Shutterstock

Related Posts

Home Loan Offers

Important Information*
Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

Logo for HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.

Logo for ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR ≤ 80% (Owner Occupier, P&I)

Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site