You can also generate rental income from your residential home by renting out spare rooms, but this is finding compatible and reliable tenants can be tough. So, buying a separate investment property and using this to generate rental income is usually a better option.
Benefits of Buying Investment Properties
- Investment in property is usually prone to less volatility than shares. The investment in this sector is relatively a safe form of investment.
- The value of your property rises in the long term.
- You become eligible to receive tax deductions. You can include depreciation in the value of the investment property due to wear, tear and obsolescence as deductions in your tax returns.
- You can obtain tax variations and enhance your cash flows.
- You can earn from the rental income.
- You can make use of negative gearing. A negatively geared investment property is one in which the interest on the property loan is higher than the rental income derived from the property. By indicating the difference between the interest and the rental income as losses incurred on the investment, you can get deductions in your tax returns. This is the legal remedy to reduce your taxes.