The decision to invest in a property in Australia is a significant one. And, you must do thorough research prior to starting your investment. The depreciation tax benefit is immense in this country and this is the reason why many investors invest in property. It is significant to decide when, where, and how to expand your property portfolio. It will help in enhancing your chances of success and minimise the risks associated with the investment. Investment in the property will help you in claiming the valid tax deduction like depreciation.
Given below are some of the vital steps that you must consider:
1. Carry out a thorough research of the property market:
It is vital to carry out a research when you either plan to purchase your first investment property or expand your portfolio. You may evaluate economic aspects and the potential of capital growth in areas with lesser entry charges and predicting high growth. You must also check Development Applications to find out any roads or infrastructure projects. The projects will contain new schools, parks, commercial spaces, etc. These things will attract a large number of renters in the area. It is also significant to examine areas with a vast range of public transport options, job opportunities for tenants, etc. Knowledge of these factors will assist in deciding future property income possibilities. You should also be aware of the existing ATO depreciation rates.
2. Evaluate acceptable risk:
You should also be aware of the kinds of risks that you are ready to accept. All the property investments are plagued with some sort of financial risk. And, identifying your limits will be vital in reducing your possible stress. It will also help in ensuring that you may not end up overextending your financial obligations. You must identify possible changes in economic aspects that may include interest rates or repairs and maintenance that might be needed on the property. It will also help in preparing your tax depreciation schedule for rental property.
3. Select vast locations and properties alternatives:
If you are keen to lessen your risk, it is significant to diversify your property portfolio to enhance your access. You must also spread the financial risks in a vast range of assets. In the financial year 2018/2019, it was discovered that 74% of investors bought investment properties in metropolitan cities. Deppro also noted that investors liked to stay with their comfort area with a vast 92 residing in metropolitan cities. The investors also bought investment properties locally compared to 8% who invested in local areas.
You must have identified by now the significance of expanding your property investment portfolio. You can get your federal tax depreciation schedule prepared by experts to enhance your depreciation claims. A large number of property investors prefer to lay emphasis on residential rental properties. But, commercial properties also provide several advantages and you may also consider them to make your investment. But some investors feel that commercial properties may attach greater risk as a result of changing economic aspects. There is also a potential lengthy vacancy rate between tenancies.