Costs of buying an investment property
by Wealth Know How in Property
There are a lot of things that go into buying an investment property – some that come readily to mind, and others that can be a nasty shock as you go through the process. Buying, selling and managing an investment property can be costly and will affect your overall return. When you buy a property, you will have to pay many bills.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 25 Mar 15
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There are a lot of things that go into buying an investment property – some that come readily to mind, and others that can be a nasty shock as you go through the process. Buying, selling and managing an investment property can be costly and will affect your overall return. When you buy a property, you will have to pay many bills.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
First there is stamp duty, which is second only to the actual price of the house. Then there will be the conveyancing fees, the legal costs of the documentation, the title search fees and registration fees. Then there are the charges for the reports you had to have done, such as the pest and building reports.
Once you’ve got over the ‘sticker shock’ of all the fees you’ve incurred buying the property, then you can think about the ongoing costs of owning a property. These start with council rates, water rates, insurance, body corporate fees, property management fees if you decide to have it managed, and all the ongoing repair and maintenance costs. As the owner, you may need to maintain the property. Maintenance of a property can be partly tax-deductible, however, it is important to double check what you can and cannot claim.
Down the track, if you decide to sell your property, you’re up for another set of costs on selling a property – agent's fees, the costs of the advertising campaign, and a fresh set of legal fees.
Another part of the ongoing costs is the interest repayments, if you’ve borrowed to buy the property – which happens in most cases. If your rent exceeds your ongoing interest and costs you may pay tax on your excess income generated by the property. If you sell the property you may also have to pay capital gains tax if the property has increased in value. There is no substitute for really getting on top of the numbers before you commit – work out your income and expenses so you fully understand the obligation you are undertaking.