Looking at investment property in Australia while you own your home is a popular and practical way to build a property portfolio. However, according to property experts, there can be several financial and lifestyle benefits to being a tenant but also being a landlord. Taking advantage of such benefits is simply a matter of forward planning, good advice and a clear long-term strategic plan.
One of the huge advantages to renting while you own an investment property in Australia is the tax benefits from negative gearing. This means that investors only need to pay down tax-deductible interest on an investment property, rather than the non-deductible interest on a purchased home.
As a renter, generally you are also exempt from having to pay costs such as ongoing maintenance and repairs and rates. On the flip side as a landlord, however, you also get the benefit of being able to claim these types of costs against your tax. For many people this can be seen as a win-win situation, and this is great news for investors who wish to free up capital and put aside money to purchase future investment properties.
Renting As A Lifestyle Choice
Experienced renters understand that being a tenant can provide a range of advantages, including the fact that they can generally afford to live in a property that they would never be able to purchase. This is particularly true at the “top end” of the rental market where their money simply goes further – as an example, the repayments on a property worth $2 million may not be within the budget for a purchaser, but they may be able to afford a weekly rent of around $900 to $1200.
Renting also offers the ultimate in flexibility, and this is a huge attraction when you’re an investor. Not only can you move at a moment’s notice if your personal circumstances change – for example, if you wish to move into a different suburb for your child’s schooling or if you have to move interstate for a new role – but you can also quickly and easily downsize to a cheaper rental property if you wish to save more money for future investments. Changing or updating your long-term strategic investment plans can be a simple matter when you are in such a position.
Looking At Your Goals And Long-Term Strategy
Anyone looking at renting while they purchase an investment property in Australia should review their goals and their long-term investment strategy to see how they can maximise their returns and ensure that they can build and maintain the risk-free lifestyle they’ve always wanted.
It is important to talk to your financial advisor to make sure you have the right structures in place to take full advantage of the tax benefits of owning investment properties. Your planning should also include getting assistance from property investment experts such as Ironfish, as they will be able to help you review your options and help you develop the right investment strategy for your requirements.