How people build wealth and gain tax advantages through investing in property

How people build wealth and gain tax advantages through investing in property
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Strategies people use to achieve wealth and tax advantages from Property

Hi all, in this article I’ll go through some of the strategies that people use to achieve wealth and gain tax advantages from investing in property.

Rental Yield

Some investors use the strategy of investing in property for the purpose of achieving rental yield. This is where they purchase property in high rental yield areas and use the rental yield as a steady form of passive income. Investors normally purchase property in areas where the rent is higher then the expenses associated with owning the property and the cash flow is positively geared.

Capital Growth

Investors could potentially use the capital growth strategy where they look to own property in areas where the value of that property is likely to increase overtime. This normally occurs when the demand for property in the area outweighs the overall supply of property in the area. Demand can outweigh supply for a number of reasons, it could be because there is an increase in available jobs in the area, there is government funding for a number of infrastructure projects or it could be an increasingly desirable location to live.

Negative Gearing

Negative gearing is a tax advantage associated with investing in property when the tax deductible expenses associated with owning an investment property a greater than the income being received by that property. the difference between the tax deductible expenses and the accessible income that is received is able to be claimed as a tax deduction. this strategy is normally coupled with a capital growth strategy and can be useful for investors that are looking to reduce their income tax liability.

Development

Property development is normally where a developer will obtain a parcel of land and construct property on that land. In some cases developers may subdivide large parcels of property into smaller parcels and in other cases they may demolish low density housing and replace it’s with higher density housing to accommodate more dwellings.

Home Improvement (Flipping)

This strategy is pretty self-explanatory especially if you’ve seen all the property flipping shows on TV. This is where an investor will rejuvenate and older home and make it more desirable for a perspective buyer. In most cases an investor will purchase a home that is below the median house price for the area and either restore it or further improve it to make it more desirable and increase the perceived value of the home for sale.

I hope you have taken something away from this, If you have found this article valuable, please don’t hesitate to like and comment what your biggest takeaway item was and subscribe for more tips to improve your financial competency!

Thanks for reading!

Warning:

Any advice within this content is only satirical in nature and does not take into account anyone’s personal circumstances. If you wish to seek tailored advice, I strongly suggest that you seek out the advice of a financial planner who will be able to provide you with holistic plan that is tailored to meet your goals and objectives.

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