PSK
  • Call Us
  • Advisers
  • Services
  • PSK Insights
  • Employee Services
  • About Us
  • Events
  • 5 Min Financial Health Check
  • Contact Us
  1. home
  2. insights

Is it better to buy an investment property or home first?

PSK Monthly Newsletter

How to budget for your social life in retirement

21 December 2020

If you're in or approaching retirement, you may be prioritising things such as living costs, utility bills, health care and even potentially helping the kids out with their future financial goals. With many Australians looking at a retirement (which in reality, could span a few decades), it is also important to plan for your own recreation and social life. For an insight into how much you could actually need and to get an idea of how much better off you might personally be, click on the link below. Read more..

PSK Monthly Newsletter

Coronavirus vaccines – are we there yet?

21 December 2020

The UK have started the roll out of a vaccine, targeting front line workers and those who are most at Risk with the United States approving their first vaccine for COVID-19 with a planned roll out to 20 million Americans by the end of December. Here in Australia, the government is currently engaged in planning for the rollout of the first COVID-19 vaccines by March 2021. In this article, Dr Ross Walker provides his views and opinions on the most common vaccines and how important they are as we strive to eliminate the SARS-CoV2 from the world. Read more..

PSK Monthly Newsletter

5 ways to shop a little smarter this Christmas

21 December 2020

With only 4 days to go until Christmas!!! It is amazing how it creeps up on us each year. If you've left your shopping a little later this year and if you are looking for some tips around managing the costs of gift giving, here are some ways you could potentially shop a little smarter, so your money goes a little further. Read more..

20 Sep 2018

 

There's a lot to consider when buying an investment property or home, especially for the first time.

Have you been saving for a long time and feel ready to get into the property market? Maybe you’re considering buying a home to live in or investing in a property you can rent out to somebody else.

Either way, it’s worth knowing some more about both options to ensure you’re making a well-informed decision, noting that regardless of what you choose to do, property prices can go through major swings that can occur with little warning.
 

Buying your first property to live in

  • First home owner grants. Depending on which state or territory you live in, a first home owners grant could help you to finance your first home purchase. This doesn’t apply to investment properties, and in some states you’ll lose your right to this grant if you buy an investment property first.

  • Security and stability. You can stay in your home as long as you like, as long as you’re making your home loan repayments.

  • Exempt from capital gains tax (CGT). Any home that is classified as your main residence, whether it’s your first place or not, is free from CGT when you go to sell it.

  • Expenses stack up and aren’t tax deductible. There will be initial costs, such as stamp duty and legal fees, as well as ongoing costs, such as water rates, building insurance and repairs. When buying an investment property, you’ll also be hit with these costs, but depending on your situation some of the costs attached to your investment property may be tax deductible.

  • You may have to make some sacrifices. Where you really want to live may not be where you can actually afford to buy. So, whether it means choosing a place that’s smaller, further out from the city, or looking for a job closer to your new home, you may have to make some trade-offs.

 

Buying your first property as an investment

  • You may get a cheaper place. An investment property doesn’t need to tick all the boxes of your ‘dream home’, which means you could potentially buy something at a cheaper price.

  • It’s not an emotional decision. Your purchase should be based on investment potential, including forecast rental return and capital growth. So, instead of walking into a place and having to love the look of it, you can walk in with your investor’s hat on.

  • Earn rental income. If you’re renting out your investment property, you’ll be getting money from someone else to contribute to your mortgage, which means you could pay off your loan sooner. Bear in mind however that the rent you receive may not completely cover your home loan repayments and additional costs.

  • Tax advantages and disadvantages. Many of the costs associated with an investment property are often tax deductible. For instance, the interest and fees you pay on your loan, advertising for tenants, as well as cleaning, gardening, maintenance and pest control. Also, if your property is negatively geared—which simply means the interest, and other costs you incur are more than the income your investment property produces—the loss can reduce the amount of tax you pay on your earnings at tax time. On the flip side, if you sell your investment property down the track and make a profit, capital gains tax may be payable.

  • Management and obligations. If you’re time poor or located a long distance from your investment property, another thing you’ll need to think about is appointing a property manager to take care of certain duties. On top of that, there are various responsibilities that apply to landlords before, during and when ending a tenancy and these can differ depending on which state in Australia the investment property is located.

 

We’re here to help

Whatever you decide to do, we can work with you to make sure your strategy suits your lifestyle, circumstances and financial goals.
 

 

 

© AMP Life Limited. First published July 2018

< Back to Insight Next Insight >
subscribe to our newsletters
  • Disclaimer
  • Privacy Policy
  • Financial Services Credit Guide

Corporate Representative of Charter Financial Planning Limited ABN 35 002 976 294 AFS Licence No. 234665.

Digital Strategy by ZeemoTM