Thanks to our strong property market and tax concessions for investors, property investment is a popular pastime in Australia, and can even provide a full-time income for some people. But how does a would-be investor get started in the property market, and ensure they make the most from their investment? Read on for Choice Home Loans’ top tips.
Hold your property for the long-term
The associated costs with purchasing and selling property – stamp duty, agents’ fees, legal costs and home loan interest charges – mean you will get more out of your property if you hold it for a number of years, rather than regularly buying and selling out of properties. In addition, property markets fluctuate in a similar way to other asset classes like shares, so if you hold for 5-10 years, it’s more likely that you will experience a complete property market cycle.
Seek out experienced professionals
Property investment can be a complicated process, particularly if you are looking at developing a portfolio of several properties over time, so you will need to enlist the help of legal and finance professionals who are skilled in this area. Accountants, lawyers and a good mortgage broker are essential to ensure you are developing a suitable structure for your investment and getting the most appropriate loan for your needs and goals.
Consider an equity home loan
Like all property purchases, you will need to put down a deposit of at least 10% of the property value to secure a loan for your investment property purchase. If you already own a home and have paid down a significant portion of your mortgage, you might want to consider accessing the equity in your home through a refinance to fund a second property purchase. If you’re a young first home buyer, you could also approach your parents to help fund your property purchase in this way.
Consider the tax implications
Although it’s unwise to buy an investment property purely for tax reasons, it’s definitely important to factor tax into your property investment strategy. For instance, capital gains tax will apply when you sell your property, while income tax will apply to any rental payments you receive from leasing it. Negative gearing also means you are able to receive a significant tax refund from the government if the costs of owning your investment property outweigh the income you receive from it.
If you’re thinking of purchasing an investment property, Choice Home Loans can help. Our network of experienced brokers can talk through your strategy and goals in detail and help you decide on a loan that meets your circumstances. Make an appointment online to talk to one of our friendly staff today.