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Property investment to fund retirement

Property investment to fund retirement

A common reason people consider buying an investment property is to help fund a comfortable retirement. If this is something you’re considering, it’s important to make sure you calculate the cash flow. 

Property can be a great way to generate a passive income, but you want to make sure it really will generate an income! It’s important you talk to a professional to get advice on your short and long term retirement goals.

Some things to consider:

  • Short and long term retirement goals
  • How much equity do you have
  • Does the cash flow make sense
  • What type of property will align best with my goals
  • What are the tax benefits or implications

What are the pros and cons of investing in property to fund your retirement?

Some of the benefits of investing in property to fund retirement can include a steady income stream, potential for capital growth and tax benefits. The downsides that you need to consider include high upfront costs, ongoing maintenance costs and tenancy vacancies. It’s very important you calculate the cash flow and invest in a property that will provide you with income.

Can I buy an investment property with my self-managed super fund?

Potentially but it is more complicated than a normal purchase. Make sure you get some specialist advice on this; you need a mortgage broker or a lender that knows and understands buying a property inside super.

Do I have to pay tax on rental income when I’m retired?

You will need to declare it as income, the amount of tax you will pay will depend on your total taxable income. But you can claim depreciation and expenses on certain properties to help reduce your taxable income.

Talk to a property advisor in Melbourne

Michael Sloan is a property author and expert specialising in helping his clients invest in property. He is part of the Better Homes and Gardens Real Estate Group and the founder of the investment company, The Successful Investor. He offers a free initial consultation.