INVESTOR

Thinking of Investing in Property?
Buying an investment property has been a popular investment and retirement strategy for many Australians. While many other investments, such as shares, can be volatile and carry great risks, investing in property has been seen as a safe alternative with potential long term capital gains and tax benefits.

It is important that you have a strategy for investing and that your finance is correctly set up to maximise the tax benefits. Many people have heard the term "negative gearing" but are unsure what it means. Negative gearing is a tax effective investment strategy where your rental income from your property is more than offset by your interest and property expenses giving you a net loss to offset against your other income (e.g. wages, salary), and thereby reducing the tax you pay. Given a sufficient time period, the value of the property you buy, will (hopefully) be increasing in value so you are making money whilst paying less tax. Investors traditionally prefer interest only loans for budgeting purposes and maximising the tax deductible repayments.

If you are thinking about property investment, check out our tips and calculators below, and have a chat to a Macarthur Financial Lending Home Loan consultant today.

Tips for Investing
Here are some handy hints if you are thinking about investing in property:
  • Seek independent financial advice. Many people turn to property investment for capital growth, tax benefits and future retirement income. Before deciding whether property investment is right for you, it is important you seek independent financial advice. Whilst Macarthur Financial Lending can help you find the right loan for investing in property, we cannot advise you regarding the most appropriate strategy or plan to achieve your financial goals. That’s where our parent company Macarthur Financial Planning can help you www.macarthurfp.hillross.com.au
  • Use the equity in your home to finance your investments. It may be possible for you to borrow against the equity in your current property for future investments (in property, shares etc).
  • Negative gearing. Many property investors structure their finances around the benefits of negative gearing. A negatively geared property investment is one where the return from rental income is less than the borrowing costs (interest on the amount borrowed) & other associated property expenses (ie Council Rates, Water Rates etc). In some cases, the tax department allows the losses incurred on the investment to be offset against other income as tax deductions. Consult Macarthur Financial Planning or your own Financial Adviser / Accountant to see how negative gearing can work for you.
  • Do your research. Make sure you do plenty of research and seek independent property and financial advice, especially if you are planning to invest in an area you are not completely familiar with. For a guide to real estate prices & properties for sale, check out www.realestate.com.au or www.domain.com.au