Here in Australia, this is quite popular. If your expenses (fees, maintenance, depreciation etc) is more than the income (rent), then the net loss is deducted from your other income and reduces the tax you have to pay. However, you actually have to be able to afford the net cash outflow. People then rely on the capital gain over many years to more than offset the cash flow for all of those years. Also, we have to pay capital gains tax on the increase in value of any property apart from the family home.
As I say, lots of sums. Frankly, I prefer quality shares as I don't have to get my hands dirty, pay fees to anyone etc.
But good to be planning this far ahead. Whatever you choose to do, so long as you keep it for the long term you will be able to ride out the ups and downs in the market.
Have you checked your sums?
Here in Australia, this is quite popular. If your expenses (fees, maintenance, depreciation etc) is more than the income (rent), then the net loss is deducted from your other income and reduces the tax you have to pay. However, you actually have to be able to afford the net cash outflow. People then rely on the capital gain over many years to more than offset the cash flow for all of those years. Also, we have to pay capital gains tax on the increase in value of any property apart from the family home.
As I say, lots of sums. Frankly, I prefer quality shares as I don't have to get my hands dirty, pay fees to anyone etc.
But good to be planning this far ahead. Whatever you choose to do, so long as you keep it for the long term you will be able to ride out the ups and downs in the market.