5 November 2013 - Out of all the methods available today to supplement your income and diversify your funds, investing in property is still one of the more stable, flexible and lucrative approaches – especially if you’ve got the know-how on your side to really capitalise on it. For foreign investors looking into this opportunity, Australia has long been marked as one of the best places to invest owing to its stable economy, well-established legal and property buying system and the significant tax incentives offered on investment properties for rental purposes.
While investing in property with the intent of migrating to Australia at a later stage offers many added tax incentives for the investor, there are also a number of benefits for those looking to invest but not migrate.
Some reasons people invest in property include:
Bricks and mortar investment: Investment property is an excellent way for investors to protect their wealth from the decline of rand as it holds tangible value. The fact that you are investing in something real gives the peace of mind that even if the worst happens, you still have something of substance and value to fall back on.
Potential for capital growth: Provided you select a property in the right area at the right time, property investment can deliver high capital gains. However, it takes a lot of research and expert knowledge to identify sound property investment opportunities in key areas.
Stable government: Australian property investment is extremely well-regulated by National, State and Local government bodies as well as consumer protection bodies that are mandated by regulatory authorities.
Enforced legal systems: Australia offers a safe place to invest owing to its strict buying process and legal system which is geared to protect the interests of landowners, including foreign investors.
Safe returns: Property investment offers less risk, allowing investors to take advantage of an investment that will grow over time, providing steady capital growth and regular monthly returns.
In the end, however, how you benefit from your investment will ultimately depend on the gearing ratio of the property and the tax implications of your investment strategy.
Positive gearing means that the annual rental income received will be higher than the annual loan repayments and costs, meaning that you will be earning extra income from the property until such time as you decide to sell it.
Negative gearing will reduce your income to a lower tax bracket, by making a loss on the month by month cost, which you will be able claim back in tax right-offs when the property is sold.
One thing that is true of property investment: it pays to talk to qualified experts. Having the advantage of experience in the Australian property market, and knowledge of the local market and property system in Australia on your side can be invaluable when choosing the best possible investment opportunities available.