How to decide when to buy your dream home in Australia
Australian property tax and expatriate tax expert Steve Douglas outlines the factors to consider when buying your future home.
Q I am considering buying a property now to live in when I return to Australia. Is this a good idea?
A In short the answer is always “yes”, however there are some key issues to consider. It can be difficult to find a home suitable for today as well as tomorrow. This is because your circumstances may be very different when you eventually return. You may think you want to live in Sydney, but end up posted to Melbourne. You might be single now, but in the meantime marry and have children. It’s very hard to predict what will happen in the future. Regardless, there are benefits in buying property now rather than waiting for your return.
- Australian taxation benefits Don’t underestimate the value of receiving a few years of “Tax Free” salary on your return to Australia, through the build-up of tax credits on your property holding expenses.
- Cost If you buy now you’ll know the full cost of purchase, as you’ve already made the transaction. For example, a house valued at A$500,000 today and bought today, will never cost any more. But if you delay the decision until you return the same house may have increased in value, and it’s impossible to predict the future purchase price. If you want to live in an area with good historical growth, buying today could actually save you thousands of dollars.
- Affordability While you are overseas enjoying improved earnings and savings power you’re in a healthy financial position. And if you engage a tenant and collect rent towards repaying your mortgage, a more expensive property in a better suburb may be easily within reach.
These compelling factors encourage the purchase of your future residence sooner rather than later. But keep in mind the property should be considered an investment with residence potential. Until you return to Australia you won’t be in a position to know with absolute certainty that it will be “home”.
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