I Index A HANDY Is property investment for me?... 1 How much could I borrow?...2 Where should I buy?...3 TO PROPERTY INVESTMENT What sort of home loan should I get?...4 What is negative gearing?...5 What is positive gearing?... 6 What s Capital Gains Tax?...7 Do I need a managing agent?...8 I m interested in applying for a home loan. Who should I talk to?...9 Everyday Banking Savings Home Loans
Is investment for me? No matter why you want to invest in property wealth creation, capital growth, taking advantage of tax concessions there are a few things to consider before you commit. Such as: Performance over time How much the property will cost over the time you own it versus how much you could earn from renting and/or selling it. Vacancy rates How often you will or won t have tenants. How much could I borrow? Our handy online Borrowing Power Calculator at ingdirect.com.au/homeloans (click on Calculators ) is a great place to start. It works out how much you could borrow based on how much you earn and what other financial commitments you have. If you already have a loan amount in mind, you can apply for an Indicative Pre-Approval at our website. It only takes two minutes to apply and is valid for three months. Rental returns What you can realistically expect for the size, condition and location of your property. 1 2
Where should I bu? What sort of home loan should I get? The location of your investment property can affect your rental returns and the property s long-term value, so it s smart to research what a suburb or area has to offer. Look at things like: Public transport Proximity to jobs and schools Parks, shops and recreational facilities Noise, neighbours and other potential irritants The recent, current and potential future growth of the area You can find out a lot of this information even comprehensive suburb profiles from various companies online. To choose the right type of home loan, think about what s important to you: The security of repayments that stay the same (fixed repayments) Being able to pay off your loan faster by making additional payments (variable repayments) The flexibility of having both (fixed and variable repayments) The freedom to access your available redraw for those unplanned expenses, like a burst water pipe The ability to have a 100% interest offset account Low fees 3 4
ne ative What is gearing? What is positive gearing? If your investment property expenses (interest on your loan, council rates, management fees etc) are higher than the rental income you get from it, you need to make up the difference from other income. You may be able to offset that shortfall, or difference, against other assessable income. This is called negative gearing. Positive gearing is where the income from your investment property is greater than the expenses. This excess amount may be added to your assessable income and increase your tax liability. Your personal circumstances and other factors will influence whether positive gearing is suitable for you. It s best to speak with your tax or financial adviser to obtain advice on investing in property. 5 6
What s Capital Gains tax? Do I need a managing agent? Capital Gains Tax (CGT) may apply to any capital gains you make when you sell or dispose of your investment property. CGT is assessed as part of your income tax and is taxed at your marginal tax rate. However you may be entitled to a discount if you held the property for more than 12 months. Managing a property can be time-consuming and inconvenient. If you re time-poor or busy, a managing agent could be a good idea. But before you decide there are a few things that you may want to consider: A managing agent will usually take care of advertising for tenants, the lease, rent collection, building maintenance and inspections Agents generally charge around 6-7% of the rent you receive from tenants, which adds to the overall cost of owning your property These costs may be tax deductible check with your tax adviser. 7 8
I m interested in applying for a home loan. Who should I TO? An ING DIRECT Home Loan Specialist. They can answer questions you have, and if you proceed with an ING DIRECT home loan, your Home Loan Specialist will be your single point of contact from application to settlement. Call 1800 100 258 between 8am-8pm Monday-Friday and 9am-5pm Saturday (EST). Or if you need some financial advice, why not call your Financial Adviser? 9 Everyday Banking Savings Home Loans Important information: Information in this Guide is current as at 14/07/11 and is subject to change. This Guide is intended to provide general information of an educational nature only and does not constitute tax or financial advice. Any information contained in this guide does not have regard to the investment objectives, financial situation or needs of the reader. It is not intended to provide financial advice and the information cannot be relied upon as such. ING DIRECT recommends you seek independent taxation or financial advice where appropriate. All applications for credit are subject to ING DIRECT s credit approval criteria. Fees and charges apply. Details of these and the terms and conditions are available at ingdirect.com.au or by calling 133 464. ING DIRECT is a division of ING Bank (Australia) Limited ABN 24 000 893 292. ING DIRECT s colour orange is a trade mark of ING DIRECT and the ING Group of companies.