The Questions to Ask Your Accountant Before Investing in Property

Buying a house can be a very exciting time for anyone. Investing in property is usually looked at as a sound investment but you should consult your accountant before doing so. Your accountant can help you before and after you make the big decision. Here are some of the questions you might ask them before you invest in property.

  • Can I afford to buy?

This is probably the most important question to ask your accountant as they will be able to calculate your monthly expenses and let you know the impact that purchasing a home and having a mortgage may have on your financial situation. They can also help you set up a budget to save a deposit and for post-purchase.

  • What is negative gearing?

Negative gearing is when a property is purchased as an investment and the gross income generated from the investment is less than the cost of owning and maintaining the property. Negative gearing is popular among investors, but you should consult your accountant to see whether negative gearing has any tax benefits for you or if you should be aiming for a positively geared property investment.

  • How does depreciation apply to purchasing a home?

Talk to your accountant about depreciation. As your investment property gets older, its value depreciates. You can claim depreciation as a tax deduction if you obtain income from your property. Speaking to your accountant after you have purchased your investment property can potentially save you a lot of money.

  • Old or new?

Should you buy an older house or a brand new one? Both options come with their own pros and cons. A newer property will allow you to claim more depreciation for the first five or so years. Renovations on an older property can also be depreciated over a set period.

  • Which ownership structure should I choose?

There are a few different types of ownership structures to choose from when buying a property. You can buy the property in your name or a family trust. The best option differs from person to person, and your accountant will be able to advise as to which option is the most appropriate for you after assessing your financial situation.

Speak to a trusted accountant before investing in property. Stones Sharp can help you make the best decision for your financial situation. Contact us to book an appointment with one of our knowledgeable Melbourne accountants today.

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