Investor

Buying an investment property (or several) has been a popular investment and retirement strategy for many Australians. While many other investments, such as shares, can be volatile and carry risks, investing in property has been seen as a safe alternative with great capital gains and tax benefits.

It is important that you have a strategy and that your finance is correctly set up to maximise the tax benefits. The information outlined below is a guide. We advise that you speak to your Mortgage Avenue consultant or Accountant before you set out to buy an investment property.

You already own a property

Using your equity in your home to finance an investment property is a great way of putting your property to work for you.

There's a growing trend among young people in particular to buy a home or apartment, pay off part of the loan and borrow against their equity to finance the deposit on an investment property. Banks can finance up to 110 per cent of an investment property, depending on your home’s value.

What about capital gains tax?

When selling an asset, the profit is subject to capital gains tax. There are some exemptions, such as your primary residence or motor vehicle. However, Capital gains tax (CGT) is the tax that you pay on any capital gain you make and include on your annual income tax return. It is not a separate tax, merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate.

Negative Gearing