How’s The Market?
– The prices of properties in your chosen locality
– Availability of properties
– Average asking price.
What’s Your Tax Position?
As a safe and reliable investment, property investment could help you improve your overall tax position.
Investors’ ability to borrow is a considerable portion of the property value. They also enjoy tax benefits based on the financing structure of their property. The type of property and estimated income affects this as well. The owner is taxed on the income if the investment returns a profit. If a loss is declared over the fiscal year, the owner could reduce the taxes he pays through offsetting the loss on other income.
Interests that you can offset against the income from the rental income:
- – Interest charged on depreciation
- – Insurance
- – Investment loan
- – Overheads or other similar costs
When an investment property incurs a net loss and this is offset against the income, this is referred to as ‘negative gearing’. Investors must be well aware of negatively geared properties due to the size of their deposit. Still, others opt to manage their properties on a loss for tax purposes.
Another to consider is investment properties, when sold for a profit, will sustain Capital Gains Tax (CGT). You should take a note of this when evaluating your property investment plan. As well as the potential profit from a property sale.
It is important to ask for an accountant or a qualified tax adviser’s opinion before venturing into property investment.