Investment Properties And Tax Benefits

Currently over 1.8 million Australians own an investment property and one of the main reasons is for the tax benefits they provide! An investment property is a real estate property which is purchased for the purpose of earning an income through the property in a range of ways which may include through renters or through resale of the property in the future. 

Buying a commercial or residential property as an investment property is an exciting time – although to make the most of it it is important to understand the ins and outs of an investment property to make the most of tax benefits and other benefits available. 

Benefits Of Making Investments In Properties

There are many benefits of investment properties with the main benefit being tax related. Many property-related expenses are tax deductible, which may include maintenance costs or fees paid on your residential or commercial loans.

Some key benefits of investment properties include: 

– Rental Income

– Capital growth

– Tax advantages

– Negative Gearing

Having rental income from your tenants is a great way to ensure you have a regular income which is beneficial for cashflow. Landlords can claim a variety of costs including property maintenance costs, council rates, pest control, garden maintenance, agent fees, strata fees, land tax, advertising costs to find a tenant and more. 

The main tax benefits and advantages which come with owning an investment property which is a rental property is that you can offset any losses on the rental property against your assessable income. It is possible to pay less tax overtime if the income you receive from the property is less than the expenses associated with owning the property as these costs will be deducted from the owner’s income. 

Negative gearing is something to take into consideration when you have an investment property. Negative gearing refers to when the income from the property is less than the rental return, interest, or other related property costs. This can reduce your overall taxable income, meaning that you are reducing the amount of tax you may need to pay – overall saving money in the long run.

Claiming for depreciation on a negatively geared property can result in an improved tax position. This is due to when you claim for depreciation this can increase the overall loss of the investment property which can then be claimed as a tax deduction against personal income. Due to this, there will be a decrease in the investors tax liability and lead to a higher tax refund. 

Reach out to the friendly team at Greenline Home Loans who can assist you with commercial property loans, accessing the best home loans, or a construction loan where the real estate property can then be used as an investment property for you to reap the benefits for. 

Top 3 Mistakes To Avoid When Investing In Properties

To get the most out of your investment property it is best to understand your goals and financial situation. Here are some tips for 3 mistakes to avoid when considering an investment property: 

1. Not conducting enough research 

It is important to carry out sufficient research before acquiring a loan or buying a property which you are intending on becoming an investment property. It is important to research the location of the property you are wanting, the possible zoning requirements in the area you are interested in, the needs and requirements of possible tenants for your property, the condition of the property and more. 

Ensuring you have undertaken sufficient research will ensure that you are well-informed about the property you are building or buying and are able to make the decisions based on factual evidence. 

2. Not having a plan or strategy in place 

It is always beneficial to have a plan or strategy in place regarding your investment property. Real estate can appreciate in value, although time is needed for this to happen. Generally, the longer you are in the market, the higher your capital gains will be. Therefore, it is important to set a plan for if you are planning to invest long-term. 

3. Not calculating finances effectively 

It is important to ensure the property you are building, or buying is a good financial decision for you long-term. Ensuring you can afford the payments required and maintenance costs by setting aside money or creating an emergency fund can limit financial hardship which may occur. 

Speak to the friendly team at Greenline Home Loans who are able to assist with commercial property loans, the best home loans available or construction loans to begin with when you are considering an investment property. 

Reach out to Greenline Home Loans today!

If you have been considering buying your first home, buying a residential property or wanting an interest-only residential home loan, get in touch with our team of experienced brokers at Greenline Home Loans. We have access to 50 lenders and a strong relationship with several major banks to assist you and offer a solution to suit your needs.

At Greenline Home Loans, we will tailor the best solution for your needs and walk with you hand in hand from the first day you consider a construction loan or small business loan. Contact our friendly team of brokers to speak about low-rate home loans on 1800 705 505 to get started today!

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