You don’t have to be a high-income earner to purchase an investment property while living in Sydney or Melbourne. There’s a simple solution for those earning less than $80,000 per year who are struggling to get on the property ladder – rentvesting.
How to become a property investor by rentvesting
Rentvesting involves purchasing a property in an affordable suburb whilst continuing to rent in an area suited to your lifestyle. It’s a great way to get into the property market sooner, particularly if buying a home in the area you live is currently out of reach.
By buying an investment property, rather than a home, you can build a property portfolio which can later be used as leverage to help afford a home, or even additional investment properties down the track.
For many on a moderate income, buying a property in Sydney or Melbourne has been unachievable in recent years. According to the latest CoreLogic data, the median dwelling value in Sydney and Melbourne is $720,072 and $626,703 respectively. While these figures may be out of reach for those earning under $80,000, there is ample opportunity outside the metropolitan areas for savvy rentvestors.
Regional vs Metro
Current BMT Tax Depreciation data indicates the majority of Australians don’t look outside their local areas when it comes to buying an investment property, significantly limiting their investment opportunities. FY 2018/19 data shows that 92 per cent of those who live in metro properties only purchased an investment property locally, compared to just 8 per cent who invested regionally.
Regional investors are far more likely to invest elsewhere, with 64 per cent owning a property locally and 36 owning an investment property in metro areas.
While the stats show some investors are limiting where they buy, those who earn a moderate income should be encouraged by the fact that they fall within the majority when it comes to the average Australian property investor. The latest data from the Australian Taxation Office for the FY 2016/17 found 64 per cent of people who own an investment property have an income under $80,000.
For those who do make their way onto the property ladder there are lucrative tax advantages. Owners of income producing properties are eligible to claim expenses relating to holding a property such as property management fees, council rates, insurance, repairs and maintenance and interest on their loan.
They’re also eligible to claim depreciation deductions for the wear and tear that occurs to the building. By taking advantage of the depreciation deductions available, investors reduce their holding costs and can even achieve positive cash flow.
BMT Tax Depreciation has worked with more than half a million property investors to help uncover tax deductions for the wear, tear and ageing of their investment properties.
To learn more about the benefits of claiming depreciation, simply Request A Quote or call the expert team on 1300 728 726.