Why is an investment property a good strategy?
People like to invest in property because it is tangible and can offer solid returns. Coupled with rental income and potential tax concessions, it’s easy to see why an investment property can be such an attractive proposition.

If you already own a home, you know what’s involved in buying a property. It won't require a quantum leap to commit to an investment property.

Is it easier if I already own a property?
Unlocking the equity in your home to finance an investment property is a great way of putting your property to work for you.

There's a growing trend among young people in particular to buy a home or apartment, pay off part of the loan and borrow against their equity to finance the deposit on an investment property. Banks can finance up to 110 per cent of an investment property, depending on your home’s value. But you'll need to own roughly half of your current property to receive 110 per cent.

What about negative gearing?
Negative gearing comes into play on the money borrowed for an investment when the expenses are greater than the income it generates. If, for example, your rates, bank fees, insurance and interest on the loan add up to more than the rental income, you should be able to claim the difference as a tax deduction.

Example:

• Expenses for the year $15,000
• Rent received for the year $10,000
• Your $5,000 loss may be claimed as a deduction.

*Always consult with an accountant or tax adviser before making any financial decision.

What about capital gains tax?
When selling an asset, the profit is subject to capital gains tax. There are some exemptions, such as your primary residence or motor vehicle. However, when selling an investment property, if the value on this property has increased, you will pay capital gains tax on the difference. This amount will then be added to your regular income and you'll be taxed at your marginal tax rate.

Financing an investment property
The amount of deposit a bank requires will depend on your financial situation. Equity Access can arrange a consultant to help you find the most suitable deal for your circumstances.