If you’re looking for a stable and secure investment, a property is a solid option. Far less volatile than other investment strategies, an investment property has the potential to deliver consistent rental returns for years to come.
Physical asset, Less volatility
You are investing in something you can see and touch. Property can be less volatile than shares or
Income, Capital growth
You earn rental income if the property is tenanted. If your property increases in value, you will
benefit from a capital gain. See Refinancing.
Most property expenses can be offset against rental income, for tax purposes, including interest on
any loan used to buy the property, repairs, rates, depreciation etc.
If you earn less from an investment property than it’s costing you, you’re said to be negatively
geared. The motivation to be negatively geared is that it reduces your taxable income and you
accept a short-term loss in the hope of a capital gain later.
Capital gain tax
Individuals and small businesses (excluding companies) can generally discount a capital gain by
50% if they hold the asset for more than one year.
Interest only loan
This type of loan is good for investors since in the interest only period of the loan: The monthly
repayments are less than when you choose to pay off both principal and interest. You can only have
the tax deduction on interest payments but not on principal.