Investment home loan
An investment home loan is a home loan for people looking to buy a property with the intention of renting it out and profiting through a rise in the property’s value. Home loans for an investment property differ from home loans used to buy a house or unit to live in – known as ‘owner-occupier’ home loans. Compared to owner-occupier home loans, investment home loans might have higher interest rates and may have stricter eligibility requirements.
Investment Home loan features such as offset accounts and redraw facilities can help borrowers save on their interest costs.
However, property investors may favor an offset account over a redraw facility as an offset account operates as a separate facility to the investment loan. This means that withdrawing funds from the offset account for personal use does not distort the loan’s purpose, maintaining the tax-deductible capabilities of the loan.
How does tax work on investment properties?
Unlike owner-occupied home loans, the interest component of investment home loans can be tax-deductible as an investment expense.
If the expenses on your rental property, including the loan repayments, are greater than the income you earn from it then you can also claim negative gearing tax concessions. These allow you to offset this loss against your taxable income for that year.
Consult a registered tax agent or the Australian Taxation Office (ATO) for more information on tax on your investment property.
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Other Services
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