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Learning the hidden benefits of property ownership

We’re considering buying a property next year and need to know about stamp duty costs. We currently live in a house supplied by my husband’s work and pay rent. If we buy a house as an investment, but plan to live in it within five years, why do we pay more stamp duty than if we were to buy a home and live in it straight away?

Laws pertaining to stamp duty can vary state by state because this is a state government tax. Governments have made concessions to first homebuyers to encourage new buyers into the home market. In New South Wales, the Office of State Revenue website has a calculator showing what stamp duty you pay and I’m sure other states have a similar service.

Generally, investors or landlords are not treated as nicely as first homebuyers but don’t get mad, get even. Promise yourself to learn about all of the tax deductions available to property investors. The Commonwealth Government’s website for the Australian Tax Office is a fantastic place to learn about the tax deductions available to landlords.

Some investors actually hire a quantity surveyor to find every possible tax deduction and they are experts on what can be depreciated in a rental property. I have seen cases where the deductions were so big they even shocked an accountant!

Don’t be afraid to buy some books on property investment, as there can be some great advice from people who really know all of the angles.

For example, the stamp duty you pay will eventually be added to the overall cost of buying the property to be deducted from any future sale price to reduce your capital gain. That’s relevant if you never move into the house and you sell it. Use this little ‘penalty’ as a reason to be a property expert and it will become the tax slug you had to have.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, September 22, 2010

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