Call us on 1300 794 893

Your Money

Your first property purchase

I simply can’t afford to buy a house or home unit in the suburbs I like and so I was have heard of people buying in suburbs where they like and simply renting them out and then renting where they like to live. What do you think of this idea?

It can be a great idea. I have often suggested to those young people who live at home with their parents that they use the money they are saving to help pay off an apartment which they rent out. The idea is leverage off the cheap rent at home to get a bank to back you in buying a home unit. The interest is tax deductible on the loan and so reduces the monthly outgoings and if you did it between, say, the age of 23 and 30, you would get seven years of capital gain. In that time, your wage could grow by seven annual increments and you might even get married or meet a life partner. With the extra income, you might be able to move into the home that you have rented.

By the way, if you rent it out for less than six years and you don’t own any other property that you live in then you might avoid the capital gains tax.

Can you do this without the help from paying low or no rent at home with your parents? Well, you would have to do a budget and you would have to do this to win a lender over. Also, make sure you buy in an area where tenants want to live and where there is a consistent history of capital gain.

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.

Related articles

Tips for buying off the plan

The highs and lows of owning property

What'€™s the real cost of a dream home?

Is the Gold Coast a golden opportunity?

Smart property plays for 2012

Published on: Tuesday, April 19, 2011

blog comments powered by Disqus
Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300