Buying the Right Property - House and Land Packages
Property is a big investment to undertake, so whether it's your own home or you intend to buy an investment property, there are several factors to take into consideration.
Choosing the Right Area
The area you choose is critical. Infrastructure such as schools, public transport and shopping centres are important indicators of the future viability of the area.
There are advantages and pitfalls accorded to the purchase of both new and old property.
|Can be purchased at a lower cost than a new home||Stamp Duty|
|No need to try and visualise what it will look like completed||Extra expenses incurred by pest and building inspections that are required prior to purchase|
|No control over appliances, colours or inclusions|
|Depreciation schedule for your tax break will not be as lucrative as a new property|
|Better tax breaks for investors with higher depreciation available||Build wait period|
|Less age related problems|
|Minimal to no stamp duty on house and land packages|
|No need for building and pest inspections|
|Custom built in accordance to your needs|
Buying in the Right Entity
Whether you are looking to buy a property in your name, in a company or in a trust, this can greatly affect the benefits you gain from the investment.
Buying in Your Own Name
Buying a home in your own name means that you won't need to pay capital gains tax on the growth of the property when you sell.
Buying Property in a Company or Trust Entity
When investing in property for your investment portfolio, a company or trust gives you the ability to claim ongoing expenses of holding your property against the overall tax in your company or trust.
Consult your accountant before purchasing to get the maximum tax benefits by purchasing in the right entity.
Buying in Areas with Growth Potential
Falling in love with an area and buying a house you wish to live in is a personal choice, but when purchasing a property as an investment it is essential that you buy in areas with growth potential so you maximise your return on investment. Rising property prices in your area of choice or a large population of professionals with high wages are strong indicators of growth potential.
Positive versus Negative Gearing
Simply put a positively geared property puts money in your pocket whilst a negatively geared property costs you money. Negative gearing can help in the short term should you have a high taxable income and require tax deduction. Speak to your accountant for the best structure to purchase in and whether negative or positive gearing is best suited to your portfolio.
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