Property Investments

Build your wealth using property

Property Investments are a valid wealth management tool with many investors choosing real estate over shares for long term investment because it is less sensitive to market volatility and offers significant tax benefits if properly structured.

How does property build wealth?

Over time, property values increase whilst if you have an interest-only mortgage your debt remains the same. Or, if you're paying off your investment property with a principal and interest mortgage, the value of your investment goes up while your debt level decreases.

This increase in property value is called Capital Growth, and as the value of your investment property increases, so does your wealth.

Many of Australia's capital cities, especially Perth, have experienced significant Capital Growth in recent years and while we can't speculate as to the Capital Growth in the future - we can see from past experience that investment properties can be used as a tool to grow your wealth.

What is Negative Gearing?

If over a financial year the amount of rental income you receive from your property is less than the cost of financing and maintaining your investment property, then you will have made a loss.

A loss can be used to the tax advantage called Negative Gearing. With Negative Gearing, the tax office can take into account your loss when assessing you taxable income, for example if you earn $55,000 a year from your employer and your investment property makes a $10,000 a year loss - then your taxable income is now $45,000. This can reduce the amount of tax you pay and is most beneficial if you're a high wage earner in a high tax bracket.

You should seek clarification from your accountant or financial planner before making a decision to invest in property.

What sort of property should I buy?

When purchasing an investment or rental property it is essential to make the decision of what to buy based on its investment potential - rather than what you would prefer to live in.

You need to ask yourself:

It is close to public transport or the CBD?
Is it in an area likely to experience Capital Growth?
Are rental properties in the area attracting tenants and good rents?
What are the likely maintenance costs on this property?
How much can I afford to borrow?
What sort of rental income will I have to contribute to finance costs?
Will I still be able to afford this property if interest rates increase by 2%?

Take the answers to these questions to your financial planner or accountant before deciding on your purchase.

What are the finance options for my investment property?

Lifespan Mortgage Services provides property investors with a range of finance options from reputable lenders experienced in loaning funds to aid in the wealth management of astute investors.

Finance options include:

To make an appointment to talk to one of our experienced mortgage brokers about your investment property finance options fill in the online form or phone 08 9317 1900.