Four questions for property investors at the end of the financial year
If you own property, you should be aware of the fixed-rate mortgage cliff and other potential issues, say the team at Raine and Horne Murraylands.
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The end of the financial year is coming – are your investment properties in order?
There are a few things to think about at this time of year if you own an investment property, or more than one, say Michael Cox and Casey DeMichele.
Here are some of the factors you might like to keep in mind.
Do you know what your property is worth?
Knowing the value of your assets is important when it comes to financial planning.
If you haven’t had an appraisal done recently – we’re talking the last few months – you might be surprised to find out how much your property is worth.
“A lot of people might have come to us two years ago saying ‘I’m going to sell eventually’,” Casey says.
“The market has changed since then, and you could be limiting the market, not knowing what you’re sitting on.
“Keeping up to date, now more than ever, is quite important.”
Knowing the value of your investment will help you decide whether to hold on to it or cash in.
Do you need to free up some cash, or diversify your assets?
As you take stock of your financial goals, in partnership with your accountant or planner, you might decide to change your investment mix.
Do you want to sell high and re-invest in multiple properties at a lower value?
Do you want to shift your wealth from property into another asset class?
The team at Raine and Horne can share their knowledge of the local property market with you as you plan your next move.
There’s one more factor you might like to consider if you invested in property during 2020 or 2021, too.
Are you about to fall off the fixed-rate mortgage cliff?
Many Australians purchased property during the early stages of the COVID-19 pandemic, when interest rates were at historically low levels.
Many of those purchasers took home loans with a fixed interest rate, often for two or three years.
But interest rates have climbed significantly since then – from a cash rate of 0.25 per cent in April 2020 to 3.85% this month.
If you purchased a property in 2020 or 2021, your mortgage repayments might be about to jump.
Will your rental income cover the difference?
“If you’re on a good fixed interest rate, compared to all the increases we’ve had, it could be an extra $1000 a month,” Michael says.
“Do you cash in on a property that’s now worth a lot more than it was, and move on?”
He and the team can help you assess your options before you find yourself in a bind.
Here’s the good news – you’ve still got time to act
Perhaps you’ve been thinking about these things, but it’s May already and you’ve given up on making a change before June 30.
Think again, says Michael.
For tax purposes, property purchases are taken to have occurred on the date a contract is first signed, not the settlement date.
If you sign a contract before the end of financial year, you can include it in this year’s tax return.
“For those people going ‘I’ve missed another year, I’ve left it too late’: no, you haven’t,” Michael says.
More information
The team at Raine and Horne Murraylands are here to help you with advice on any real estate matter.
Visit www.raineandhorne.com.au/murraylands, call 8532 3833 or drop into the office at 4 Seventh Street, Murray Bridge.
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