Was investing one of your 2021 goals? If so, property is one of the smartest investments you could make. 

With interests currently at their lowest and the market absolutely booming, now more than ever is a great time to kickstart your portfolio.

If you are a bit of an investor rookie and you have no idea what Capital Gain Tax is, or you are a seasoned property investor, this article breaks down the lingo, the top investor tips, an insight into ‘rentvesting’ and even some suburbs to watch in 2021. 

NEW INVESTOR TIPS 

  1. Know Your Budget – Before you buy an investment it is important to know your cash flow. Also, make sure you seek out professional help – sit down with accountants, mortgage brokers, and your bank to determine what you can afford. It is also a great idea to get pre-approval so you know how much you can spend. 
  2. Buy in a Growth Area – Do a bit of research before you buy. Look at what areas or suburbs have a high rental demand. 
  3. Be Realistic About Your Investment – What exactly are you looking for, is it fast capital growth or to hold the property as a long term investment? Map out your plans and factor this in when looking for a property. 
  4. Buy with Your Head, Not Your Heart – Remember you are buying this property with the full intention of using it as an investment. So don’t go buying something that needs a bit of work are involves various additional costs. 
  5. Factor in Ongoing Costs – Make sure you factor rates, insurance, and general repairs into your budget. As soon as you have purchased the property, get in and make any necessary repairs before putting it on the rental market. 
  6. Do Your Research – As mentioned above, it is so important to do some research before you buy. However, do you know where to start? Jump on realestate.com.au or domain.com.au and focus on the fundamentals of supply and demand and finding an area where capital growth is possible and the value will go up. 
  7. Buy Liveable, Not Luxury – Remember a rental property only has to be clean and functional. Don’t get sucked into buying a property simply because it has a stylish interior. Buy for practicality!
  8. Seek a Professional – Investing can be complex and sometimes professional advice is money well spent. 

TERMINOLOGY 

  • What is Capital Gains Tax? and how to calculate it

Capital gains tax (CGT) is the levy you pay on the capital gain made from the sale of that asset. Here is what you have to do to ensure you have your finances in order and you can account for CGT. Firstly, CGT is not a stand-alone tax; it’s part of your income tax.

How to calculate: If you’ve bought and sold your property within 12 months, your net capital gain – the difference between the sum of your capital gains and the sum of your capital losses – is simply added to your taxable income. However, if you’ve owned the property for more than 12 months, calculating your final taxable income is a little bit more complicated than adding your net capital gain to your earned income. 

For more information on CGT, speak with your broker. 

  • What is Land Tax? 

Land tax is an annual or quarterly tax owners pay to state and territory governments, based on the value of the land they own. Land tax is charged on any land owned or co-owned above a certain value threshold. That threshold is different in different states. It includes vacant land bought to build on or the land a house or unit is built on.

Generally speaking, a principal place of residence is exempt, meaning land tax is predominantly a concern for property investors.

Each state has different rules surrounding land tax, so make sure you find out how much you are required to pay. 

  • What is Stamp Duty?

Stamp duty refers to the tax you pay on certain transactions and documents. One of these transactions where you need to pay stamp duty is when you purchase a property. 

Stamp duty is decided by separate state and territory governments, rather than the federal government, so rates vary.

Use the realestate.com.au Stamp Duty calculator to work out how much you might need to pay.

  • What is Rentvesting?

Rentvesting is an upcoming trend with the new generation, where buyers rent a property in an area in which they want to reside, however, they buy a property in an area they can afford. It is a way for people to start their property journey without having to compromise their lifestyle. There are both pros and cons to this method of buying, however, it may seem appealing to the younger generation. For more information, read this article. https://www.realestate.com.au/advice/what-is-rentvesting/ 

WHERE YOU SHOULD BE INVESTING – SUBURBS TO WATCH

According to recent sales statistics we have recognised exponential growth over the South East region, in particular in the Ipswich, Toowoomba, and surrounding regions. The region has become a hotspot for interstate migration and investment. In most recent statistics found by Realestate.com.au, the rental market is extremely strong, with rental demand continuing to increase month-to-month. 

Specific data suggest that Toowoomba in particular is a great place to buy in, with Newtown 4350 being the top growth suburb. 


TAYLAH ANTONIOLLI – MARKETING & COMMUNICATIONS COORDINATOR
07 3202 3040
A go getter and doer, Taylah is a no excuses, get the job done kind of girl. With a strong work ethic and high attention to detail, Taylah is happy to help out wherever she can. Armed with a degree in business specialising in marketing and public relations Taylah brings fresh ideas and innovation to the iThink team.
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BUY  |   SELL  |   RENT  |   MANAGE