The strength in property investment lies in location. Just because you wouldn’t live in a suburb doesn’t mean others won’t. You need to consider what type of tenant you are after and then do some homework on areas.

• Visit real estate agents and check their rental listings over a couple of weeks and notice how quickly they are leased and for how much.

• Send away for demographic trend reports.

• Check the amenities available in the area. If you are looking to rent to new families look for things such as shops, parks and schools. If your market is uni students, then best you be looking near universities.

Tax Breaks – please explain!

To encourage people to purchase investment properties, the Government has created a set of tax incentives that can make the whole concept more appealing. Negative Gearing is the most common of these.

Negative Gearing essentially means that if your annual costs are greater than what you receive in rental income, you can claim the difference against other types of income such as your salary. For example:

If the total costs associated with your investment property come to $10,000 and your rental income is only $7,000 you have a shortfall of $3000.  You can apply to claim that as a tax deduction against your salary.

Depreciation on other expenses is also claimable at tax time.  A portion of, or percentage can be claimed over the life of the asset. Depreciable items include:

• Fixtures and fittings such as carpet and curtains
• Furniture
• Building costs
• Inspection Costs

There are a number of ways to claim depreciation and for the full details we suggest you consult your accountant or taxation agent.