Kym Goodenough Real Estate

A Family Business with Family Values


Should your first home be an investment property?

Posted on 29 June, 2015 at 0:50

Can’t decide whether to buy your first property as your home or as an investment property? Here are some issues that may help you make up your mind.


With property prices soaring in Australia’s biggest capital cities, the urge to buy a property is stronger than ever.


If you’re buying your first property, the first thing you need to do is decide whether to buy it as a home or a rental property. This decision will impact on everything else you do down the line.


It can be a difficult decision to make. On the one hand, you want that security of living in your own home without the hassles of dealing with a landlord. On the other hand, you want to start building your property portfolio to secure your retirement.


There are upsides and downsides to each option. The best way is to assess all of these and see what works best for you over the short and longer term.

1. You may be able to access the First Home Owner Grant


While there are more restrictions and it is less generous now, the First Home Owner Grant is still available to first home buyers and could help you in a big way if you qualify. This assistance is only given to first-time buyers purchasing their homes.


2. You don’t have to pay tax when you sell


If you buy your first property as a home and live there for at least 12 months, you won’t have to pay capital gains tax when you sell, no matter how much the value has grown during that time. There are certain taxation rules that you need to meet, but essentially, as long as you’ve lived in this property for the whole time and haven’t earned any income from it, you’re entitled to full exemption. In contrast, you’ll have to pay capital gains tax on your investment property when you sell.


3. Potentially easier to get a mortgage


The recent crackdown on investment lending will likely make it more difficult for investors to get a loan, especially those who are just starting out. In contrast, lenders are often more willing to lend to borrowers who are buying their homes. There also could be scope to get a lower interest rate as a first home buyer, depending on your lender.

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