Published on March 3rd, 2016
Property Pep Talk – Investor Tips (3)Useful ideas, hints and reminders for people investing in property.
Your investment loan
As with traditional home loans, there are many investment loans available to suit specific needs. The two most common loans taken out by Australian home buyers are variable rate loans and fixed rate loans. However, interest only and line of credit loans prove to be the most popular choices for investment properties. The type of loan you choose will be based on your financial situation and your investment goals. Your accountant or financial advisor will help you work out the benefits of investing for capital growth, negative gearing, tax deductions or a steady retirement income, and they’ll direct you to a loan that suits your needs.
You will not be affected by the capital growth of your investment until you sell your property. If the sale price is greater than the purchase price, it’ll be subject to capital gains tax (CGT) and could affect your income tax considerably.
Negative gearing occurs when the annual income you receive from your investment property (rent), does not exceed the annual costs of your interest repayments and maintenance costs. You’re then able to deduct your property costs from your gross income, reducing your annual income tax.
While your investment property is being rented, you’re able to deduct property expenses from your gross income. These costs can include repairs and maintenance, council rates and government charges, advertising costs, agent management fees and interest repayments and loan fees.