Residential Loans

Owner Occupied Loans

Owner occupied qualify for the lowest mortgage rates. In order for a home to qualify as your primary residence, these are some of the characteristics that must be met:

• You must live there a majority of the year.
• You need documentation to prove your residence. You can use your council rates, water rates, utility bills
• Only one property can be claimed as primary residence at a given time.
• Loans can be fixed or variable or combination of both.
• Most of the banks offer offset account with owner occupied loans

Investment loans

A Property investment loan is a type of home loan that investors take out to buy an investment property. This is a loan for those who want to buy a property and rent it out to receive income from it, but don’t have the cash to buy the property without a loan. When considering borrowing to invest in property one os the most important criteria is the rate and type of repayments for the loan.

• These loans can be fixed, variable or a line of Credit
• These can be used to buy property for rent.

Negative Gearing

Negative Gearing on property applies when the costs (interest, council rates, water rates etc) of ownership exceed  the income (rent) generated by the property.

The Australian Taxation Office (ATO) allows property investors to offset an income loss incurred on a real estate investment against any other income. In other words your investment must make a loss before you can claim a tax benefit. It works not only for property, but also for  shares and bonds.

Investment expenses that you can claim as a deduction

Property owners can claim deductions and depreciation against income on the property. There are three main classes of deduction available to investors:

• Revenue deductions – These include interest on the loan as well as ongoing maintenance and recurrent expenses such as agent’s fees, council fees, advertising charges, bank fees, body corporate fees, cleaning expenses, gas, water, gardening and insurance.
• Claims for capital items – Large capital items such as a hot water service, white goods, etc are subject to depreciation. This means the owner must claim the cost over a number of years rather than all at once. Depreciation schedules are set by the Taxation Department and range from a few years to more than 20 years.
• Claims for building allowances – Owners can also claim depreciation of capital works, specifically for building and landscaping. The current rate is 2.5% over 40 years.