A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceeds the income it produces. Simply put, your investment must make a loss before you can claim a tax benefit.
You can also positively gear a property. This occurs when the investment income exceeds your interest expense (and other possible deductions). Note that you may be subject to additional tax on any income derived from a positively geared investment.
You should also consider any other costs involved when deciding on your investment property strategy.
Equity is the difference between the bank or lender’s valuation of your property, and the debt that you owe on it.
Can I use Equity from My Current Home to Invest in another Property?
Yes. Using the equity from a home that you already own may mean that you won’t need a deposit to fund the purchase of your investment property. Instead, your existing home’s equity may be used.
Your equity – the difference between your home’s market value and the balance of your mortgage – is likely to have increased over the years you’ve owned your home.
Do I Need a Property Investment Planner, Investment Advisor or an Accountant?
Property Buyers Agent cant give advice on your individual finance matters. It is good to have a property investment planner, investment advisor or accountant to give you professional advice on navigating your finances.
What Should I Look to Avoid when Buying a Property?
One Industry towns, where growth depends on one activity. Example Mining towns and tourist only dependennt towns, Older houses with no depreciation, expensive features such as swimming pools and heritage-listed properties, as they create problems – especially with compliance.