The expenses involved in procuring an investment property aren’t restricted to the house; there are charges, duties, rates, and miscellaneous expenses that can truly be disastrous for a buyer who’s unaware of them.
Do not worry we are here with a list of expenses that are involved in the process:
Expenses that are incurred at the beginning of the purchase –
- Bank fees – Some banks do charge an application fee when a buyer applies for a mortgage.
- Inspection costs – It is always advised to get the property inspected before purchasing as there might be hidden costs involved which only the experts can figure out. Such hidden expenses can be a nightmare for the buyers and hence getting the inspection done is crucial. And so, forth the inspection charges are incurred.
- Mortgage insurance for the bank – This refers to the security amount the bank seeks if you fail to pay back your home loan.
- Legal expenses – This refers to the costs that are involved in the process of transfer of property ownership.
- Stamp Duty – This is the property transfer tax that the buyer is obliged to pay to the government.
Apart from these expenses, there are few more ongoing expenses that the owner might need to take care of – These expenses are recurring in nature and hence, ongoing.
- Accountancy Costs – It is advised to hire an accountant who can handle the taxes and is an expert in the field. Who can help the owner to understand the costs that can be claimed and the expenses that can’t be claimed? The accountant can also assist in assessing the depreciation and expenses.
- Bank fees – Yes, apart from the bank fees paid at the beginning; There are some banks that charge annually to continue the mortgage.
- Income tax – Any rental pay that surpasses the expense of the home loan is classed as profit, and so taxable.
- Council rates – These rates differ based on the area, city, state; They are paid by the owner every quarter to keep the neighbourhood services on the run. Like getting the garbage collected every morning etc.
- Property Manager expenses – You may want to hire a property manager or property agent who can assist you (the owner) in discovering occupants, and carry out other required duties. By delegating him the landowner can ease up from his responsibilities.
- Insurance of the property – Property Insurance and landowner Insurance will assist you with any harm to the property (including the damage done by occupants) or uncleared dues by the tenants. It will likewise cover you for things like flood harm, fires, and so forth.
- Taxes – There are 3 fundamental taxes Australian landowners may have to settle — Income Tax, Capital Gains Tax, and Goods and Service Tax. These differ contingent upon the owner, the state, and the property.
- Strata fees – Also classed as Body Corporate charges, these costs are incurred when your investment property is inside an apartment block or condo complex. It covers the maintenance of shared facilities like pools, gyms, gym equipment, etc. The cost differs depending upon the facilities.
- Interest – This refers to the interest charged on the mortgage. It can be fixed or variable.
- Maintenance costs – With the property comes maintenance costs, any work completed to keep up or fix portions of the property like cleaning drains or fixing plumbing is included under maintenance costs. These expenses are the obligation of the landowner and not the tenants.
- Pest Control – Bugs like cockroaches, arachnids, insects, and termites, harm your property as well as spread contamination. The most ideal approach to dispose of these pests is to call the pest control services; From time to time, you’re most likely going to have to get somebody to visit the property and to spray the property and ensure that there are no pests issues with the property.
- New Tenant fees – These costs include the fees paid to the property managers when a tenant comes through him. It also includes the advertising costs involved in attracting new tenants for a vacant property.
- Renovations – Renovations are important, it can increase the value of the property and also bring comfort for the existing tenants. It will include cosmetic changes like changing the door models to a newer model, upgrading kitchen design, etc.
- Travel and Accommodation – Yes, there might be expenses for your travel and accommodation when you want to visit the property for inspection.
These costs will vary from property to property but the above list can give you a head start about the expenses involved in the investment property market.
By InvestFox
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