Negative gearing with second property

| May 3, 2010

Henry review and property investing

Well at least there is one good news for property investors with the new Henry report document that has been released , negative gearing is not going to be affected. This is going to encourage people to invest in property and therefore create more  dwellings  for the new influx of the ever expanding australian population

Investing when young can make you a millionare

Recently  friend of  mine  ( age  26)said he was a bit hesitant with   investing  in his second property given the Henry review was just coming out and things were uncertain , but now that things are not changed with property investment  , he is going ahead with looking out for a good property in caning vale australia. Mind you this area has already gone through a big price boom in the last couple of years.

what  is his  investing strategy ?

He  has  already invested  in a land and house package at $360 k  and now  has decided  to make it into an investment property. Given that  the loan is a interest only loan he will  not be paying a   huge amount on the  loan repayments and  the rent derived will cover part of the repayments. The House was about 200k so he will be able to claim full depreciation as it is new house ( which will be approx $5000). Now given that  he  would  have already paid the shortfall in repayments of the loan from his own wages from job for this whole year. Come tax time he would be getting  5 k worth of depreciation plus negative gearing on expenses on the house. This money which he saves as tax deductions if he  puts aside  for next year , he would possibly not have to  put any more money into this investment for the rest of  his life.

If he is lucky enough and there was a substantial price growth in this house  , he would be looking  to  go forward with his next house  in caning vale  and create another investment and possibly  be one of those property millionaires in a couple of years.

Punters need to keep in mind  , they would have to afford the deposit on their first house , plus the  Bank mortgage insurance if it is  a investment property or then if it is even a second investment property. Lucky punters who have had substantial growth in their first investment would not have to worry about this  as the equity gained could be used to take care of the mortgage insurance in the second investment. Now my friend could possibly even retire  at 35 with the right kind of luck with sensible decision making  with his property investments.

Good luck  property with your investing

Article by sheldon singh

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Category: Featured, investment property, Millionare, negative gearing, Property Market, property outlook, property prices, Property sector

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