Rent is Not Dead Money if You Do This
A listener to my radio interview states, “I was always told that paying rent was dead money” – is this right or am I better off renting?
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The main reason for this is Income tax. Outgoings on your residential investment property are tax deductible but those on your residence are not.
Other advantages
My philosophy is to buy and accumulate, not buy and sell. If your occupation means moving to other locations to take advantage of job opportunities, the home selling and buying costs are prohibitive. However, if renting you simply hand back the keys and move on. Remember, as a renter, it is important to own a residential investment property in a capital city to protect you from increases in house prices.
As an example, let’s take Brisbane. A young person might wish to enjoy the facilities and lifestyle of living in the inner city. It is now common for them to rent inner city but buy a residential investment property in the outer suburbs.
Let’s say they want to backpack around Europe for 12 months – they hand the keys back on their rental whilst continuing to enjoy the rental income and inflation protection of their investment property.
Inflation Protection
With a residential investment your income (rent) and the dollar value of your property increase with inflation. Friends, who rent in Sydney, as they cannot afford to buy, recently bought a new house in Brisbane as an investment. This is becoming more common. Some people are selling one house in Sydney and buying two in Brisbane.
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Steve Taylor
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At the helm of Steve Taylor & Partners, Steve has been delivering expert advice and product knowledge to clients for over 30 years. We provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the above subject. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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