How To Turn Your Home Into An Investment Property

Описание: How To Turn Your Home Into An Investment Property

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This is the most comprehensive guide on using equity to buy a second property.

00:00 How To Turn Your Home Into An Investment Property
00:16 1. Why Would You Even Want To Do This?
01:05 2. How Do You Even Go About Actually Doing This?
02:17 3. What Happens In The Situation Where My Partner Becomes Pregnant?

In this expert-written guide, you’ll learn everything you need to know about buying a second home and renting the first, from using equity to buy a second home to what you need to pay in stamp duty.

So if you’re looking to learn how to buy a second property with no deposit, you’ll love this guide.

Let’s dive right in.

Why You Would Use Equity to Buy a Second Property
How does equity work when buying a second home
How to buy a second property with no deposit
Can you buy a second house and rent the first?
How do you rent your old home and keep as an investment?
Can we afford a second property?
What is the best loan structure?
Will the bank refinance the first loan and combine the two?
Should I stay with my current lender or refinance?
Am I required to pay mortgage insurance?
How to buy a second house

Do you plan on returning to your home in the future?
If the rental property is your Principal Place of Residence and you have plans to sell it, you might want to abide by the six-year rule so as to avoid paying for capital gains tax (CGT). The six year rule states that if you live in the property and then move out and rent it out, you can claim an exemption from CGT for a period of up to six years. However, if you exceed the six-year rule, you will need to pay for CGT when selling the property.

Will your property be positively or negatively geared?
It’s important to know which investment strategy will suit you the best. One important question is whether your property is positively geared or negatively geared. A property is positively geared if its rental earnings are higher than the cost of owning the property (loan repayments and other expenses).

On the flip side, a property is negatively-geared if you make a running loss on the property. The cost of owning the investment property (loan repayments and other expenses) is higher than the rental income. Negative gearing will reduce your taxable income.

Do you know what your tax benefits are?
There are tax benefits when you convert your home into an investment property. They include tax deductions you can claim on things like council rates, body corporate fees, agent fees, and more.

Second is depreciation allowances where you can claim depreciation on the building and the plant and equipment in your property. The building allowance refers to the construction cost of the building such as the driveway, the walls, and concrete.

The plant and equipment allowance refers to the items within the building such as the dishwashers and ovens. Before you claim depreciation allowances make sure to get a qualified surveyor to make your depreciation schedule.

What kind of investment loan will you get?
An owner-occupier loan has different features to an investment loan. Your requirements from your mortgage may change once you convert your home into an investment property. As an example, you may want to consider an interest-only loan to claim interest as a tax deduction.

We have investment loan products that are suitable for aspiring property investors. You can check them out here and see which products are right for you when turning your home into an investment property

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