‘Rentvesting’ is a term that is being used a lot in 2016 and quickly becoming young aussies way into the property market. ‘Rentvesting’ is when someone purchases a property and uses it for investment purposes, but themselves choose to rent rather than owner-occupy. This trend is sweeping the nation, allowing young people to get a foot in the market, whilst negating the stress of covering mortgage repayments in full themselves and relying on a rental income to help pay off their first home.
‘Rentvesting’ comes with some great advantages:
- Flexibility: You have maintain the flexibility as a renter to move to areas as you please, upsize or downsize and even move to a different city whilst being a first home owner.
- Tax benefits: The tax deductions applicable to investment properties that are not available to owner-occupied properties make ‘rentvesting’ a more viable option for many people. According to the ATO – some of tax benefits for your investment include:
- Water and council rates
- Home insurance
- Tenant advertising
- Agent fees and commission
- Pest control, cleaning and gardening bills
- Repairs and maintenance
- Depreciation deductions for the wear and tear that occurs to the structure of the building and the plant and equipment assets contained
- Land taxes
- Interest on mortgage repayments
The downside to ‘rentvesting is that you are still renting: whilst this seems obvious, the major downside to rentvesting is that you are still renting, and someone else is living in the home you own. Rentvesting does go against the indoctrinated ‘great Australian dream’ of owning and living in your first home. If you can wrap your head around this, rentvesting is a fantastic way to get into the property market whilst still having the freedom to live where ever you like!
If you would like to find out more information on the benefits of ‘Rentvesting’ or find out if it right for you, call Solid Investment Property on (03)9690 2666