HOW MUCH YOU CAN BORROW Not as much as you used to! Very few lenders will now

lend more than 90 % of the purchase price. In fact, some lenders have reduced how much they’re

willing to lend to 80 % or even 70 % of the value of the property. If you’re borrowing more than

80 % you will need to pay what’s called lender’s mortgage insurance (LMI). If you own property

already, you can use the equity as a deposit. This is the easiest way to buy without actually saving

for a deposit. Need to know LMI is tax-deductible if the loan relates to an investment property

purchase, and it’s deductible as a borrowing cost over 5 years.

KNOW THE PERKS Tax-depreciation benefits are at their greatest when the

property is new, giving a significant boost to your cash flow. According to quantity

surveyors and depreciation experts Washington Brown, a new apartment purchased

for $700,000 could expect about $18,000 in tax depreciation benefits in the first year.

Need to know Get your tax refund early. Instead of collecting negative gearing

benefits at tax time, you’ll enjoy a little extra cash throughout the year. You’ll need to fill

in a PAYG form withholding variation; this allows your employer to take less tax from

your wages. You’ll still need to complete a tax return to calculate your actual tax liability. R

TAX TO PAY

You’ ll have to pay tax on the rent

you receive but this can be offset by

the expenses on which you can

actually claim a deduction. Need

to know You’ ll also have to pay

capital gains tax (CGT) on any

profit you make when selling the

property. You can reduce this tax

by adding in the buying and selling

costs. CGT is charged at your

marginal rate, but if you own the

property for 12 months or more you

become eligible for a 50 % discount.

HOUSE OR UNIT Across Australia’s eight capital cities,

the median apartment price for the June quarter (according

to Domain) was $524,905 compared with $731,188 for houses.

Apartments also tend to deliver higher gross rental yields

than houses and can be easier to maintain but this can come

at the cost of high strata levies. As for capital growth, houses

usually deliver better long-term gains due to the land component.

Need to know Lenders tend to be more restrictive with

units so, before you commit, check that your lender doesn’t

have the area you’re buying in flagged as a high-risk postcode.

Face value

Face-up pouch in Black

Nappa, $500, A-Esque.

5

3

MONEY MAG’S EFFIE ZAHOS

REVEALS HER TIPS FOR BUYING

YOUR FIRST INVESTMENT PROPERTY

HOW TO EARN & SAVE

LOCATION

You don’t have to invest in

the state in which you live.

If you’re going to build a

real-estate portfolio, there

are diversification advantages

to spreading it between

states and it will also lower

your land tax bill as this is a

state-based tax. Need to

know Units attract much

less tax as land tax in most

states is based on the

unimproved value of the land.

real living

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NOTED