How to get more bang for your buck when buying a property

Buying property can be an effective strategy to build long-term wealth.

In this article, we share a few tips to help you get more bang for your buck when buying a home or an investment property.

Do your research carefully

Whether you’re buying a home or an investment property, it’s important to research areas of interest meticulously.

If you’re trying to build your wealth, you’ll need to find a property that is likely to experience capital growth.

So how do you assess a property’s capital growth potential?

First, investigate growth trends and median values within the suburb. It is also important to establish what comparable properties in the immediate vicinity have been selling for, as this will give you an indication of current market value.

There are plenty of great online resources where you can track down this kind of information, for example, realestate.com.au.

If you’re planning to rent the property out, also consider the average rental yields within the suburb, as this will give you an estimate of the kind of income your property may generate.

Next, consider the local amenities. Are there shops and schools nearby? Is there access to public transport? What are the local schools like? Properties that are close to amenities are more likely to appreciate in value.

Lastly, check with the local council whether there are any planned developments that could impact upon the capital growth potential of your property.

Architectural and building inspections

Make sure you’re not buying into a money pit.

It is important to ensure that there are no major structural issues with the property you are buying.

Pest inspections are also a good idea and the local council will tell you if the property is in a high risk area for termites.

If you are buying into a multi-unit development, look carefully at the set up and running of the owners’ corporation and identify if there are any current or future maintenance requirements that are likely to incur additional costs.

Documentation

Seek professional advice before you enter into a contract of sale.

Look carefully at the Section 32 or Vendors Statement as this contains information concerning the property that the vendor is legally required to make you aware of.

Make the most of available incentives

If you’re buying an investment property, negative gearing can be an effective strategy to reduce your taxable income.

Negative gearing is when the expenses associated with owning the property outweigh the income it generates. Speak to our taxation experts at LDB to find out how you can reduce your tax in this way.

With your home, you can’t claim income tax deductions for costs associated with buying or selling the property. However, generally you aren’t liable for capital gains tax or goods and services tax when you sell your home.

If you are a first-home buyer, there are plenty of incentives to help you get a foot on the property ladder. You can find details about the First Home Owner Grant here. You may also be entitled to stamp duty exemptions and concessions.

First-home owners could also get more bang for their buck by making the most of the Government’s First Home Super Saver Scheme, where individuals can salary sacrifice up to $15,000 per year into super to save a deposit for a house. The money is taxed at 15 per cent on entry, and when you purchase a property and the money is released, there is a 30 per cent tax offset.

Seek professional advice

Having a team of knowledgeable professionals in your corner can help you get more bang for your buck when buying property.

At LDB, we offer a full suite of services to help you achieve your property purchasing goals.

Please get in touch by calling (03) 9875 2900 or send us details via the contact form below.