An investment property can be a long-term endeavour, such as an apartment building, or an intended short-term investment (where a property is bought, remodelled or renovated, and sold at a profit).
The steps to buying an investment property are essentially the same as the buying process for your own home. Variations occur at the contract stage where you’ll need to purchase investment home insurance, instead of home insurance, and at settlement, when tenants will move in instead of you.
The positive of negative gearing
Along with the recent tax reforms, negative gearing has come into focus with some proposals suggesting the practice will be restricted to new housing purchased prior to July 2017. While a change this drastic is unlikely, nearly 70% of people who are negatively gearing property earn below $80,000 per annum, meaning the prospect of change has direct and serious implications for the financial circumstances of many Australians.
While just what changes will be made is a debatable mystery, negative gearing still presents a viable means for investors to offset asset losses as a tax deduction. Further, with only 70% of those who utilise negative gearing only doing so for a single property, an assessment of your circumstances and an astute approach can greatly assist in enhancing your position.
A long-term negative gearing plan accounting for capital gains adjustments in conjunction with a strong mortgage strategy creates the foundations for a manageable investment that helps grow rather than risk your wealth.