5 Jul

COSTS OF INVESTING IN PROPERTY

Posted at 16:43h

There are many fees associated with investing in property that impact overall cost and profit.

Costs to buy and sell

Buying and selling property involves multiple fees and costs:

  • Stamp duty
  • Conveyancing fees
  • Legal costs
  • Search fees
  • Pest and building reports

Should you choose to sell your property, you will also incur agent’s fees, advertising costs, and legal fees. You will also be required to pay capital gains tax if your property has increased in value.

Borrowing money to buy

Individuals will often borrow money to invest in property and will need to pay a mortgage. Relying on rental income to cover mortgage isn’t ideal as there may be times when the property has no renters.

Costs of owning an investment property

Investment properties don’t just come with buying and selling costs, there are also ongoing fees to pay:

  • Council and water rates
  • Building insurance
  • Landlord insurance
  • Body corporate fees
  • Land tax
  • Property management fees (if you use an agent)
  • Repairs and maintenance costs

You may be able to claim tax deductions on certain expenses, but you will still have to pay them upfront. If your investment is positively geared, then you might be required to pay tax on the rental income you acquire.

In the enthusiasm of investing in property, it can be easy to overlook these costs and fees. However, recognising the short term and long term costs associated with buying and selling property will make navigating your investment much easier.