Make Housing A Worthier Investment

Worthier InvestmentReal estate prices in Australia sometimes prove to be beyond the financial means of the common man. It does not matter why type of housing it is, whether a multi-unit, duplex or triplex unit, the housing prices per se are just too high for the middle class to afford them comfortably.

Housing Affordability Issues

R-Code Residential notes that property prices in the island nation are the third highest in the world, which makes buying a dream home in this country a distant mirage for many. Predominant housing affordability issues in Australia include:

• Rising rent levels that increased the pressure on public housing, leaving many homeless.
• Lack of enough houses, particularly affordable ones for those willing to invest.
• No properly functioning property markets in remote Australia, which scares people away from investing.
• High interest rates that push EMIs to higher levels.
• Inadequate returns on investment.

How to Take Advantage of These Issues

The good news is that you can take advantage of such a bleak real estate scenario. For example, investors can take advantage of the tax system that allows negative gearing losses on housing assets that generate income via rents.

Such a tax system allows investors to offset their negative gearing losses, i.e. where the rental income is less than the costs of property investment against their other incomes. This way, not only will investors avail of capital gains, but also a tax discount by 50%, provided the concerned parties hold the investment at least for one year.

Invest through SMSF

Another way to make the most of the housing affordability issues in Australia is to invest in property via the SMSF or the self-managed superannuation funds. With SMSF funding your property purchase you:

• Need not pay the capital gains tax, which could save you money.
• Can avail of thousands of dollars’ worth of capital gains that will fatten your retirement savings.
• Can use ‘bring forward’ option with SMSF to save further on tax and build up funds quickly.
• Can claim tax deductions on interest, insurance and maintenance.

Cut through the housing affordability issue in Australia by using your SMSF fund. You can do this by making the most use the nation’s tax system.

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