Opinions on my recent Investment Property purchase?

That is good to hear.

Another issue which will present itself is there will be hundreds of units that will be coming online over the next 10 years, rental demand will decrease with an oversupply, and unless your unit is of a large size in a unique complex, then CG will be negatively affected also.
What living space does the unit currently contain?

 

Buildings that have scores of units run the risk of no scarcity factor, vulnerable to stupid people in your building selling/renting cheap which will directly affect the value of your own unit and high strata/maintenance fees, among others negatives. If your after CG asap then I don't know if this will deliver any time soon. Generally CG is dependant on supply/demand and I think the supply and in coming supply for that type of stock will overshadow demand for awhile. Keep learning and educating yourself and you will grow as you go along this journey you are on. Keep in mind its just my opinion and I don't have a crystal ball.

 

The property is around $1100 negatively geared per annum, ignoring depreciation. See attached

 

You're right!

 

Okay I see what you mean now. That's a good point that I hadn't taken into account until now. I'm thankful for your replies here and I am most definitely learning along the way, I am 22 years old so I have a long trip ahead of me! I'm happy to take any education possible.

 

When you have a property which is only very slightly positively geared (say a grand or two) are you better off taking action to make it just negatively geared to get the tax concessions?

 

Mate at 22 you will be able to do many more great deals as time goes on. Don't sweat it. Most important thing is to educate yourself as much as possible re property investing. You have time on your side which is a massive plus. Kudos to you for thinking about your future at 22 and making a serious financial investment/commitment.

 

Suggest you do lots of reading on here & listen to say the Property Couch guys on their podcast from Ep 1 forwards (it'll take a while), lots of great fundamentals & then you can choose your strategy & invest wisely for the future.
Well done on starting & good luck!

 

Why would you invest just to get a tax concession?

Tax deductions can be maximised by leaving a property untenanted and not earning an income.

 

No it cant.

 

Care to elaborate?

 

ATO website:


" If you have an investment property that is not rented or available for rent – such as a holiday home, hobby farm, or another dwelling you choose not to rent:

• the property is subject to CGT in the same way as a rental property
• you generally can't claim income tax deductions for the costs of owning the property because it doesn't generate rental income
• you may be able to include your costs of ownership in the property's cost base, which would reduce any capital gains tax liability when you sell it."

 

The point I'm making is deliberately turning a positively geared property into a negatively geared one does not make sense.

 

My advice: next time you go to buy property, post on here before you buy

The best thing you did here was to get started at such a young age. Keep at it!

 

@Timmah Congratulations on getting into it! I'm a little envious, I wish I was buying investment properties at 22, what an awesome head start.

I'm not sure this was a great purchase given the other options out here- but I think you've done the right thing by applying a 20% deposit (No LMI, low risk and limit repayments) even if it means you haven't been able to purchase two properties instead of one (as per comments in your other thread). Assuming no unforeseen circumstances and a long holding period, this property will be good for you.

I agree with all the points made so far and just wanted to add a couple of my own;

- That rent is very high for a 1-Bedroom in Surfers Paradise. There's only a couple of complexes pulling that rent, has it been rented yet? My other concern is that your returns may drop after the Commonwealth Games.

- @Jess Peletier 5.14% seems a bit high to me? Tim's got a high income, minimal debt and significant deposit. Surely he'd qualify for a great rate?

 

You can do better than that in many cases - I haven't read the whole thread but the security may be difficult to place, as not all banks are happy with small units. It's not an outrageous rate, assuming it's IO investment loan. If it's P&I you should definitely be able to do better.

 

Interest is deductible on an income producing asset (IP).

However the principal isn't.

 

FWIW in my experience I have claimed major remediation/repair works costed through special levy contributions.

These costs were rolled into total Strata costs on my yearly PM statements. Accountant was fine with it, was questioned by ATO on submission however had all the info to back it up.