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Guest Article by Craig Joslin, Founder of The Australian Expat Investor – Helping Australian Expats Build Their Wealth While Living Abroad (http://www.austexpatinvestor.com)
As someone who has been investing in Australian property for almost twenty years, I have developed a good appreciation of the pros and cons of investing in Australian property. However, as an Australian Expat, I now appreciate that there are some additional reasons why Australian property provides unique benefits over other investment alternatives.
Here are 5 reasons I believe Australian expats should invest in Australian property
1. Keep a Foot on the Property Ladder
I know so many Australians who said they were going to move overseas just for a couple of years, but then five, or even ten years later they are still enjoying their expat lifestyle. The problem is, if they haven’t invested their savings wisely during that period, when they start thinking about moving back to Australia they may find that property prices have moved dramatically whilst they have been away and they are now priced out of suburbs they once considered affordable.
Making sure you invest in at least one property in a location similar to where you will want to live when you return to Australia will protect you from being priced out of the market (due to an unexpected price boom while living abroad).
2. A Stable Investment That Can Be Leveraged
Whilst property prices can move up and down, they are much less volatile than other investment classes like shares, gold, foreign currency. It is this characteristic, along with the historical capital growth that property has achieved, that enables banks to lend money at relatively low interest rates (and with high loan to value ratios).
Banks have been tightening the lending rules for Australians living abroad in 2016, however, it is still possible for Australian expats to finance property in Australia. I recommend talking to an experienced mortgage broker to determine your borrowing capacity and which bank will be most amenable to your circumstances.
3. Tax Benefits
I do not recommend in investing in any asset class because of the tax benefits. Tax benefits should be the icing on the cake. However, Australian property does provide some unique tax benefits for Australians living abroad. Not only can you claim tax deductions for all the costs in financing, maintaining and managing the property, you can also claim a depreciation deduction. Depreciation enables you to reduce your tax liability by recognising a deduction for the fact that the building and fittings of your property reduce in value each year through among other things normal wear and tear.
And if your tax deductions exceed your taxable income, then you can carry your tax losses forward to future income tax years.
4. Forced Savings
There are lots of things to tempt the new Australian expat to spend money on when moving abroad. You will be tempted (or forced) to spend money on more holidays and trips back home, on international school fees, and on generally keeping up the “expat lifestyle”. Before long it is easy to find yourself not having much left over to save.
A property investment (through forced loan repayments) can provide some discipline to your spending while living abroad.
5. Ability to Add Value
One of the reasons I personally like investing in Australian property is that you are in control of adding value to your investment. With the right property selection, an owner can add value to their investment by doing a cosmetic makeover, a major renovation to the house, sub-dividing the land, or landscaping the garden. There are many ways an owner can add value to a property, that they cannot do with their share or managed fund investments.
And with Milk Chocolate’s Project Concierge service, you no longer have any excuses for not completing your renovation project while living abroad.
Milk Chocolate purchase residential and commercial property in Australia on behalf of Australians living abroad, looking for a home or investment property. To see how we can help you get in touch here.
#onthehunt #milkchocproperty #propertyconcierge
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