When considering purchasing an investment property, there are a number of factors to keep in mind about whether the property is right for you. Having the property save you a significant amount of tax may be a priority for you, but for others a positive cash flow may be a priority. Regardless, you need to know what you want out of it and if a property you’re looking at is likely to provide that.
Discussing your priorities and personal preferences and taking into account your income and financial background with a financial planner will help you decide what type of investment is right for you. You should consider the opportunity cost of your investment to ensure that the place you invest in measures up to your other options.
Just the same as it is unwise to start a business without a plan, you should have a plan for your property investment. Having a Property Feasibility Analysis prepared for a property you have in mind will help you to compare that property with others to see if it ticks all your boxes. Although there are never any guarantees with investments, a feasibility analysis will give you a good estimate of what will happen if you purchase it.
Your accountant can prepare the analysis for you by measuring the performance of a potential or existing rental property. When you have a good grip on what the property is costing you per week after tax and depreciation you can make a more informed decisions on whether to purchase, sell or how to manage the property.
If you are interested in conducting a Feasibility Analysis on a property, feel free to contact us for help.
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by Carol Allan
Carol is a Senior Accountant at Insight Accounting advice. She is a registered tax agent, has a Bachelor of Commerce and Advanced Diploma in Accounting. Carol’s areas of expertise include tax and property advice.
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- 7 Tax Tips For Buying & Selling Property
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.