Howdy, I am a corporate lawyer based in Sydney with an interest in property investment. I haven’t invested in anything till now since my work keeps me so busy but I have decided to not put it off any longer. Having said that, I’m still a novice, and I don’t know any other investors either. Do you have any guides that could work for first time investors like me? Any basic info is also okay.
Thanks in advance!
Any tips or guides for property investors?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Any tips or guides for property investors?
Hi and welcome to the Home Loan Experts forums Kafka,
We have a whole list of calculator which you can use to calculate various things such as your assessable income, your borrowing power, how to determine your genuine savings, etc.
Some of these are follows:
Some borrowers also like to use a trust to invest in properties to get the asset protection and tax advantage associated with it. You could also get a loan with your SMSF trust or learn more about how to set it up.
Cheers,
Otto
We have a whole list of calculator which you can use to calculate various things such as your assessable income, your borrowing power, how to determine your genuine savings, etc.
Some of these are follows:
- How much can I borrow calculator – This calculator allows you to enter your income and expenses to calculate how much you can afford to borrow and still maintain your standard of living.
- Credit score calculator – This will help you see how your home loan application will be credit scored by our lenders and how risky they will find you to be.
- LMI calculator – Different lenders calculate LMI in their own ways and this calculator helps you compare fees to find the cheapest option from our lenders.
- Mortgage comparison calculator – If you are comparing different loan products from lenders and want to know which one is cheaper for you, then this calculator is for you. It will allow you to include the details of both mortgage plans and calculator the total cost of the loan.
- Loan repayment calculator –This calculator will allow you to see how much your repayment amounts will be with different rates, a different loan period or loan amount.
- Postcode location guide – Did you know that some lenders will consider the location of your property while approving your home loan? This guide will let you see how your location is classified and if it comes with any restrictions.
Some borrowers also like to use a trust to invest in properties to get the asset protection and tax advantage associated with it. You could also get a loan with your SMSF trust or learn more about how to set it up.
Cheers,
Otto
Re: Any tips or guides for property investors?
Wow that is a lot to digest! I think I might need a bit more time to go through all those, but thank you for the input. One quick question though, Im also thinking if I should sell or rent out my existing house and move into a new place in case I like the newer one. Is there anything I should look out for in that case?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Any tips or guides for property investors?
Hi Kafka,
In case you buy a property and decide to move into it and rent our your current home, you will have to declare the rental income in your tax returns. During this you can lump together day-to-day expenses such as rates and water into depreciation.
Keep in mind that if you end up selling the property then the capital gain made on the sale will be reduced according to how long you have lived in it for.
We also provide special services for professional property investors which you may find useful in the future. In particular we can negotiate better rates for you, find ways to borrow more and help make your investment strategy a success.
You can also read up articles on the latest news for property investors which should help you keep up to date with the latest developments.
Cheers,
Otto
In case you buy a property and decide to move into it and rent our your current home, you will have to declare the rental income in your tax returns. During this you can lump together day-to-day expenses such as rates and water into depreciation.
Keep in mind that if you end up selling the property then the capital gain made on the sale will be reduced according to how long you have lived in it for.
We also provide special services for professional property investors which you may find useful in the future. In particular we can negotiate better rates for you, find ways to borrow more and help make your investment strategy a success.
You can also read up articles on the latest news for property investors which should help you keep up to date with the latest developments.
Cheers,
Otto
Re: Any tips or guides for property investors?
Hi Otto, Id also like to learn more about property investing. I am a fulltime IT engineer in my late 30s with no history of investing but I see that a lot of people are getting into it which has made me interested too. In particular they say that you can get a lot of tax benefits by investing, how does that work out?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Any tips or guides for property investors?
Hi rubydays,
You are right in that investment loans allow you to get tax benefits under negative gearing. This allows you to borrow to invest in property and use your interest and running costs on the new property to reduce your taxable income. When your rental income becomes more than the costs of maintaining the property, this is known as positive gearing which is what you should aim to reach eventually. Regardless of whether your property is negatively or positively geared you can also claim expenses such as repairs, depreciation, building insurance to reduce your tax payable further.
You should also be aware about capital gains tax – this is basically the tax paid when you sell a property. The capital gains (or loss) tax is determined by taking the selling price of the property minus the cost of the property along with other costs such as depreciation and incidental costs. Capital gains will have to be added to your income and you will be taxed on it, however any loss cannot be used to reduce your tax payable unlike in negative gearing.
Cheers,
Otto
You are right in that investment loans allow you to get tax benefits under negative gearing. This allows you to borrow to invest in property and use your interest and running costs on the new property to reduce your taxable income. When your rental income becomes more than the costs of maintaining the property, this is known as positive gearing which is what you should aim to reach eventually. Regardless of whether your property is negatively or positively geared you can also claim expenses such as repairs, depreciation, building insurance to reduce your tax payable further.
You should also be aware about capital gains tax – this is basically the tax paid when you sell a property. The capital gains (or loss) tax is determined by taking the selling price of the property minus the cost of the property along with other costs such as depreciation and incidental costs. Capital gains will have to be added to your income and you will be taxed on it, however any loss cannot be used to reduce your tax payable unlike in negative gearing.
Cheers,
Otto
Re: Any tips or guides for property investors?
How much can I save on depreciation? Is there a certain rate I can follow to calculate this or will I have to speak to my bank about this?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Any tips or guides for property investors?
Hi rubydays,
Depreciation for investment properties can be used to claim tax deductibles for depreciation of furniture, plants, equipment or buildings which you are renting out.
The accepted methods of depreciation are the Diminishing Value method and the Prime Cost method. In the Diminish Value method the amount you can claim decreases by a certain percentage very year. The Prime Cost method uses a fixed value for depreciation every year. You would have to speak to your accountant about this in more detail to see which method you can apply.
Depreciation can help you save a lot of taxes every year however when you sell your property you will need to add the total depreciation claimed to your capital gains. Most investors feel that this works in their favour however, so it may help you to include this in your investment strategy.
Cheers,
Otto
Depreciation for investment properties can be used to claim tax deductibles for depreciation of furniture, plants, equipment or buildings which you are renting out.
The accepted methods of depreciation are the Diminishing Value method and the Prime Cost method. In the Diminish Value method the amount you can claim decreases by a certain percentage very year. The Prime Cost method uses a fixed value for depreciation every year. You would have to speak to your accountant about this in more detail to see which method you can apply.
Depreciation can help you save a lot of taxes every year however when you sell your property you will need to add the total depreciation claimed to your capital gains. Most investors feel that this works in their favour however, so it may help you to include this in your investment strategy.
Cheers,
Otto