Buying a rental property is a very popular investment in Australia. For many investors, the appeal of owning an investment property is linked to their familiarity with this asset class – most of us either own or rent a house, apartment or villa. Over time, a quality, well-located property could generate long-term growth and income yield.
Houses and units may be easier to understand as an investment than many other assets such as shares and bonds, yet owning an investment property doesn’t come with any guarantees. There are risks and costs budding landlords need to consider.
If you’re not sure you could cope financially, you might need to rethink your investment strategy. Likewise, you need to be aware real estate prices can fluctuate.
Downsizing into a smaller property or moving to a more affordable location could be a worthwhile way to help finance your retirement lifestyle.
It can be a valuable strategy for empty nesters, some of whom may find maintaining a big and empty family home no longer makes sense financially or from a lifestyle perspective.
By downsizing to a more affordable property such as an apartment or townhouse, you could potentially unlock capital tied up in the family home.
With this extra capital, you may consider investing in either an investment property or another asset class. Before you make a move, be sure to speak to a financial adviser to determine whether a downsizing strategy is right for you.
Things you should know
This information is current as at 1 July 2023.
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.
This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website.
Any tax considerations outlined above are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. The tax implications can impact individual situations differently and you should seek specific tax advice from a registered tax agent or registered tax (financial) adviser.
Any projections are predictive in character. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The actual results actually achieved may differ materially from these projections.
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