Thinking about how you can optimise tax deductions and wealth creation on an investment property purchase?
Tip – Borrow the full purchase price, plus all related costs IF You have non-deductible debt, such as a home loan AND You have equity available that you can borrow against in your home or other properties.
Maximise Tax Deductions:
Borrowing to cover both the purchase price and expenses like stamp duty, transfer fees, solicitor fees, and buyer’s agent fees, optimises your tax deductions.
Preserve Your Savings
Keep your surplus savings and all free cash flow for reducing the debt and interest on your home loan, rather than depleting them going towards purchasing an investment property, when all the interest is deductible on the investment loan, and it isn’t on the home loan.
Deposits and Purchase Costs
The ideal approach includes borrowing for the deposit to ensure it’s claimable. Few people realise that if you pay for the deposit from savings, it isn’t tax deductible, even if you pay yourself back and borrow the money from the investment loan when the new investment property settles.
Paying for the deposit or purchase costs out of pocket might seem straightforward, but to fully leverage tax deductions, it’s beneficial to fund these through a loan.
When borrowing to purchase an investment property, it often pays to to borrow approximately 106% of the purchase price to cover all the costs of purchasing, including stamp duty, conveyancing and other adjustments such as rates, water and loan set up fees. You may also borrow to cover the cost of a professional adviser, such as a Property Planner or Buyer’s Agent.
Listen to the Property Trio Podcast
Take a listen to all the mortgage strategy tips and tricks on:
- Repayment strategy.
- Using equity to fund your investment.
- Keeping cash reserves to protect against risk and minimise interest on your home loan to pay it off faster.
- Maximising the use of offsets accounts to optimise deductions, preserve debt for asset purpose changes and to pay off your home loan faster.
- Some counter intuitive mortgage strategies for more unusual circumstances that can arise.
- And especially if you live in a stepping-stone home that you would like to keep and turn into an investment.
Even if you have only home loan or investment debt, this episode will set you free to maximise your wealth and protect your risk via your mortgage strategy.
To learn more about investment borrowing, check out the following resources:
- Our You Tube video on optimising your investment deductions and other mortgage strategies at our Youtube page
- Mortgage Strategy 101 – Ep 4. Optimise Investment Deductions
- Ep# 239 – Optimising Offset Accounts: Mortgage Strategies for Investors Who Have Home Loan Debt to Create Wealth & Maximise Retirement
- Ep#250 – Investment Borrowing Masterclass: Maximise Tax Deductions and Advanced Mortgage Strategies for Long-Term Wealth Creation
- Maximise Your Wealth – Mortgage Strategies for Savvy Investors
Wondering how to borrow more than the property’s value for investments?
Reach out to us!
At Property Planning Australia, we’re dedicated to helping you maximise your wealth through strategic investment loan structuring.
Contact us today to explore advanced borrowing strategies that amplify your investment’s potential.
