536 | CGT Mistakes, Busting Mortgages & More: The Top 5 Property Questions on the Internet!
Mar 6, 2025
01:09:09
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Quick takeaways
Investing in apartments versus houses requires understanding location and scarcity, as market performance has shifted in favor of land value.
Balancing a portfolio with both property and shares is essential, as each offers unique advantages based on individual risk tolerance and goals.
Mortgage repayment strategies, like using offset accounts and making extra repayments, are crucial for minimizing interest and achieving financial freedom quickly.
Deep dives
Are Apartments a Good Investment?
Investing in apartments requires an understanding of market performance and property types. Traditionally, outside of major cities like Sydney, apartments have shown comparable long-term capital growth to houses. Recently, however, there has been a shift, especially in the past decade, where houses tend to outperform apartments due to land value perceptions. When considering apartments, it is crucial to assess their location, scarcity, and potential resale value, as supply can significantly impact capital growth.
Investment Property vs. Shares: Which is Better?
The debate over whether investment in property or shares is superior often depends on individual risk tolerance and investment goals. Historically, property provides greater leverage opportunities, leading to potentially higher returns over time compared to shares. However, investing in shares may offer the chance for rapid growth and diversification but also comes with volatility and uncertainty. Ultimately, a balanced portfolio that incorporates both assets may yield the best approach for long-term wealth accumulation.
How to Pay Off Your Mortgage Quickly
To pay off a mortgage swiftly, one should leverage strategies such as setting up frequent repayments to minimize interest costs. Utilizing an offset account can significantly reduce the interest payable by keeping funds accessible while lowering the outstanding mortgage balance. Additionally, making extra repayments, whether from bonuses or tax returns, can greatly decrease the loan principal, which in turn lessens overall interest owed. Following a disciplined budget that ensures spending is less than earnings is crucial for achieving mortgage freedom.
Understanding Capital Gains Tax
Capital gains tax (CGT) applies to the profit made from selling a property, with particular rules governing its calculation. For investment properties held over 12 months, a 50% concession on the capital gain can significantly reduce tax liabilities. It's vital to account for any purchase-related costs like stamp duty and legal fees, as these can adjust the cost base when calculating CGT. Strategic tax planning, such as timing sales during lower income years, can further optimize tax outcomes related to property transactions.
How Lenders Calculate Serviceability
Serviceability refers to a lender's assessment of a borrower's ability to repay a loan based on their financial situation, considering income, expenses, assets, and liabilities. Each lender has unique algorithms that calculate borrowing capacity, often influenced by factors such as rental income and household costs. Banks typically apply a buffer rate to ensure borrowers can manage repayments, even if interest rates rise. Understanding these criteria can help potential borrowers improve their serviceability and access better loan terms.
Folks, in today’s supercharged Q&A session, we’re answering the top 5 property & finance questions on the internet!
From the essentials you need to know about capital gains tax to understanding how banks assess your borrowing power, we’re covering the most searched (and often misunderstood!) topics in property, finance, and money management.
Here’s what we cover... ✅ The hidden pros & cons of apartments vs houses ✅ The real battle between property & shares ✅ Mortgage hacks that actually work ✅ Capital Gains Tax explained – and how to reduce it, and much more!
Tune in now for expert insights, real strategies, and insider knowledge that could change your financial future!
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