Why Invest In Property?

This is the first post in a series of 6 all about buying an investment property. Topics covered will be:

• Why Invest In Property?
• The Return On Your Investment
• Choosing an Investment Property
• Choosing an Investment Loan
• Tax and Your Investment
• Managing Your Asset

Check back soon for part 2. I hope you will find them informative.

Why invest in property? The big difference between property and any other type of investment is that you can actually touch it. It’s bricks and mortar, not just numbers on a screen.

It’s also considered one of the more solid, less volatile forms of investment. Investors tend to like property for its:

• Potential capital growth (increase in value).
• Ongoing rental return.
• Tax benefits.

You don't need a big salary to get started. Lenders consider the potential rental income you’ll get from the property when calculating how much you can borrow. So property is a viable investment option for first time property buyers as well as existing property owners.

If you already own your own home, and have a reasonable amount of equity in it, you mightn’t need to raise any cash to start investing. Many lenders will let you use that equity as a deposit for the investment property.

But if you don’t already own a property don’t be put off. If you have a deposit saved, an investment might be a good way to get into the property market. While you won’t get all the grants and concessions that come with buying a home, you don’t have to wait till you can afford somewhere that suits your needs. You can buy something that might make you some money instead.

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0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Home Loans Joondalup

What You Need to Know About Tax & Your Investment Property

When it comes to property investments and tax there are 3 main things to be aware of:

* Negative gearing.
* Tax deductions.
* capital gains tax.

Negative Gearing

Negative gearing is when the annual cost of your investment is more than your return. Basically, when the cost of maintaining your property and paying the interest on your loan is more than the rental income you get from it, you are negatively geared.

When this happens the government allows you to deduct the costs of your property from your gross income. So say your income is $60,000 a year but your property costs you $15,000 a year, you’ll only need to pay income tax on $45,000.

This way you’ll pay less tax, but don’t be mistaken, it is still a loss -just a smaller one – that hopefully will be more than made up for by the property’s increasing value. You probably won’t see a return on your investment until you sell the property, and only if it’s for a much better price than you originally bought it for.

Tax Deductions

Whether you are negatively geared, or getting a positive income stream from your property, you can claim expenses relating to your rental property for the period your property was available for rent.

All the following expenses can be claimed:

* Advertising for tenants, agents fees and commission.
* Interest payments and loan fees.
* Council rates, land tax and strata fees.
* Depreciation of items such as stoves, fridges and furniture.
* Repairs, maintenance, pest control and gardening.
* Building and landlords insurance.
* Stationery, phone costs and any travel to inspect the property.

The above is not a full list of what you can claim. Get proper advice from a tax expert before putting in your return.

Capital Gains Tax

What the Government gives with one hand, it takes with the other. Capital gains tax is a tax on the profit you’ve made on the property. So it’s based on the difference between what you sell it for and what it cost you (the purchase price plus anything you have spent on capital improvements or renovations).

Definitely get advice on what you might be up for when considering selling your investment property.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Home Loans Joondalup

Is Joondalup One of Australia's Hottest Suburbs?

November's Australian Property Investor magazine cover is branded with The Annual HOT 100 Australian Hotspots. The cover story focuses on research by Peter Koulizos from TAFE SA, Cameron Kusher, senior research analyst from RP Data and Terry Ryder of hotspotting.com.au. 100 suburbs Australia wide are listed alphabetically, each representing one of the hottest suburbs in the country for investment. Joondalup is one of only 8 suburbs in Perth picked as 'hot'.

The article reads:
The Perth suburb of Joondalup is the kind of market Terry Ryder expects will prosper in the next phase of the property market."We've been through a period in the bottom end has been the most active sector and next will be the trade-up buyers seeking homes in price ranges one tier above the first homebuyer market," Ryder predicts.

"Joondalup City includes a cluster of suburbs with median house prices in the $300,000's and $400,000's. These suburbs have a pleasant environment between Lake Joondalup and the ocean, one of the most impressive CBDs anywhere in Australia - with extensive shopping, education, transport, medical and admin services. The transport interchange links train and bus services ad is integrated with a regional shopping centre. The big kicker for Joondalup is the State Government decision to name it the 'primary centre' for northern Perth in the Directions 2031 plan, which means government spending will be specifically targeted on this centre."

Most of us have already discovered the City of Joondalup is a great place to live and above is a pretty compelling article in favour of it also being a great place to invest. With rates still low and rental returns still impressive, now may be the best time for you to get into the investment market - right here in your own neighbourhood! Speak to a mortgage expert to find out what your options are and get a written pre-approval for additional security and negotiating power.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Home Loans Joondalup