Property Investment can be an effective way of increasing your returns and reducing risk in an investment portfolio. It’s also about securing your financial future.
If you’re looking to extend your portfolio, you’re most likely familiar with the main advantages and disadvantages associated with property investment. However, if you’re a first timer, you may not be aware of the following:
• Property investment leads to capital growth: The value of your property will grow over time if you manage your investments effectively.
• Investing in property is a safe investment: The market is not dominated by investors, hence a natural buffer in the market.
• Property investment can lead to tax benefits: Whilst tax benefits should not be the only decision making factor it can be a benefit of investing in property, especially if you’re property is negatively geared.
What is negative gearing?
Negative gearing is a property investment option you may want to consider if you’re looking for a tax efficient investment strategy.
Negative gearing occurs when the annual interest payable on the loan used to acquire the property plus other expenses incurred in maintaining the property exceed the annual rental income the property generates.
There is always a risk associated with undertaking a negative gearing strategy, so it’s imperative you liaise with a professional that can advise you of all options available to you regarding property investment.
The disadvantages involved in property investment include:
• Investing in property can have hidden and ongoing costs: On top of the initial costs (deposit, legal fees, conveyancing fees) you will need to allow for other costs such as repairs and maintenance, land tax and council rates.
• Liquidity: You can sell your property when times get tough, however selling a property is a lengthy process and access to funds can take some time.
• Shortfall between repayments and rental income: Whilst negative gearing does offer tax deductions, you need to consider and budget to ensure you can cover the cost of the shortfall.
Do you want to speak to a professional regarding property investment?
Whether you’re investing in property for the first time, or seeking to extend your portfolio, The Quinn Group can help you. Our accountants and lawyers are well equipped to provide you with property investment advice suited to your needs.
You will also have access to all our other services, including accounting, tax and legal services. Submit an online enquiry today or call 02 9223 9166.