An investment property is a popular investment among Australians. It involves purchasing a residential house to rent out to families or individuals for domestic purposes, or a building, office or factory rented out to a business for commercial purposes.
The benefit of owning an investment property is that you receive rent from the tenant in exchange for them occupying your property. Generally, a tenancy agreement is put in place stating the rent that must be paid and the term of the lease arrangement (here’s an example of a NSW tenancy agreement).
The types of returns that can be received include the rent paid and potential for the property to increase in value (known as capital growth).
From a tax perspective, in Australia, all income is generally taxable and, if the property is sold, capital gains tax may be payable if the property has been sold for a profit. If an investment loan was used to assist with the purchase of the property, the interest on the loan is generally a tax deductible expense.
Each situation is different, so it important that ll tax matters are discussed with a professional accountant or tax adviser.
Here are some of my articles relating to investment properties: