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A median priced Perth investment house now costs around $750 a week to hold, and from 1 July 2027 you can no longer use that loss to cut the tax on your salary. In this mini episode, Michael Killiner works through what the budget really means for anyone thinking about buying their first investment property.
Michael runs the numbers on a $980,000 Perth house, from the interest bill to the rent coming in, then asks the question that matters most. What else could that money be doing for you? He covers the traps new investors fall into, why high yield is often high for a reason, and why rentvesting is now in the firing line.
To finish, he walks through five alternatives to buying an established investment property and who should still buy one.
Essential listening for first time investors and rentvestors who want to understand the true cost of holding property after the budget.
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General advice only and not personal advice. CRN 485467
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In this episode:
- The budget did not kill property investing, but it raised the bar. From 1 July 2027, losses on established investment properties bought after budget night on 12 May can no longer reduce the tax on your salary. New builds are exempt, and the 50% capital gains discount is being replaced with inflation indexation.
- On a median priced Perth house of $980,000, with a $1,029,000 interest only loan, the cash shortfall is about $39,500 a year, or around $750 a week, after rent, rates, insurance, management and repairs.
- If markets are right about two more rate rises, add roughly another $100 a week to that shortfall. Build a buffer that survives either way.
- Over 10 years, funding that shortfall costs about $353,000. The same money in your home loan offset at around 6.25% would be worth about $477,000, so the property needs to grow roughly 4.7% a year for 10 years just to win.
- Chasing yield can backfire. If only another investor would buy from you, walk away. If a young family, a professional couple or a downsizer would compete for it, you have depth.
- Rentvesting is harder to justify now. A first home grows free of capital gains tax, can use the 5% deposit scheme and takes rent risk off the table.
- Five alternatives to weigh up first are your home loan or offset, super, shares and ETFs, borrowing against your home to invest in shares, and upgrading your own home.
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Subscribe: https://youtube.com/@ThatBackyardPropertyPodcast
Instagram: https://instagram.com/backyardpropertypod?igsh=MWhkOWx5YzJxdDc3ag==
Website: https://tuskfinance.com.au
Connect with Michael:
Facebook: https://facebook.com/tuskfinancemk
Instagram: https://instagram.com/mortgageswmichael
LinkedIn: https://linkedin.com/in/michaelkilliner
TikTok: https://tiktok.com/@backyardpropertypodcast
Tusk Finance: broker@tuskfinance.com.au
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Chapters:
(0:00) Welcome and four key points
(0:50) The $750 a week holding cost
(1:40) What the budget changed
(2:30) Investor loans fall, interest only rises
(3:10) The numbers on a median Perth house
(4:55) Stress testing another rate rise
(5:10) Offset account vs investment property
(6:15) The high yield trap
(7:10) The owner occupier test
(7:40) Why rentvesting is under pressure
(8:20) Five alternatives to property
(9:20) Who should still buy
(9:55) The key takeaways
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Produced by Podwave Studios: https://www.podwavestudios.au
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