Recent Buying Selling Lifestyle Investor Tenants
Recent Buying Selling Lifestyle Investor Tenants

The Price to Investing

09-Dec-2019
Written by Sarah Newton
An investment property has a great chance for a long term financial return, however there are costs that need to be covered before the profits start to come in.

One off initial Costs
- Deposit: This is usually 10% of the asking price and serves as a part payment before settlement.
- Loan establishment fees: This is the fee that financial institutions charge to set up costs for your loan. Fees are determined by the financial institution you are borrowing from.
- Mortgage insurance: You may be required to pay this if your deposit is less than 20% of the property's value.
- Connections: This is the cost of the installation of any utilities and services for the tenants that will be occupying the property.
- Stamp duty: This is a fee that is levied on documents. It is dependent on the property's value and will usually be higher than the fee on a principal home.
- Legals: Usually performed by a conveyancer or solicitor, this cost covers the legal transfer of ownership.

Ongoing Costs
- Insurance: This will protect you from unforeseen building repairs as well as common tenant issues
- Yearly Mortgage Fees: Your loan could be subject to a yearly loan account fee. You can contact your financial institution to determine if this is applicable for you.
- Land Tax: This tax is levied on the owners of land.
- Council Rates/ Government Taxes
- Body Corporate Fees: If the property is a townhouse or apartment and resides on a shared block its likely you will incur these fees. These fees are dependent on the condition of the property, its features and the area it is in.
- Utilities: You will be charged for the cost of any services
- Property Management: This is the fee or commission for an agency to manage your property and will differ for each agency.
- Repairs: As the owner you will be responsible to maintain the property which will be an ongoing cost throughout the investment.

Tax for Property Investors
- Income tax: you will have to pay tax on income which you receive from the property. This includes profits from rent.
- Capital gains tax: you are required to pay this fee on any profit made once the property investment is sold.
- Property taxes: this is also referred to as council rates and helps to fund government investments and expenditures.
- Land tax: this is imposed by the government and is payable based on the value of land you own.

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