A massive 63% of property investors were feeling concerned about rising interest rates, 40% were concerned about the cost of living, and more than one in 10 fear they may have to sell, according to new research commissioned by Australian fintech startup TaxTank.
Following the Reserve Bank’s recent decision to lift the cash rate by 50 basis points to 0.85%, an increasing number of Australians are feeling the sting of rising cost-of-living pressures, with a mortgage of $750,000 now requiring an extra $199 a month.
“With some property investors now feeling concerned about maintaining their portfolios in the current environment, it’s absolutely vital not to panic-sell properties,” said Nicole Kelly, TaxTank founder. “Too often, we see clients sell properties based on the wrong criteria because they don’t have the right information. Clients look at the mortgage they need to pay out, and the cash left over, instead of which properties are performing the best in their tax return and what cash is required from their pocket to hold that investment each week.”
Data also showed that only 34% of property investors were confident that they know their cash position well, and only 21% were confident that they know their tax position.
“Understanding the performance of each property is crucial to ensure solid decision making, and let’s not forget about capital gains tax (CGT), which often catches investors off-guard,” Kelly said. “There is no getting around CGT; however, knowing the tax impact of a property sale will not only enable better decision making on which property to sell, but when to sell to reduce the liability where possible. However, performance is not just about tax; knowing your suburb growth percentage and forecasted equity should be a consideration to capitalise on your investment over time. Solid record-keeping is also paramount in this equation.”
With property values easing and interest rates rising, now’s the time for property investors to assess their portfolios to manage their assets with confidence to ensure long-term success, Kelly said.
Cloud-based software TaxTank allows investors to do growth forecasting, provides them with a transparent, real-time view of their cash and tax positions for informed decision making, and enables quick and easy calculation of CGT using smart tax tools.