How Aussies can unlock $20k property hack

Shock $20k hack changing Aussie lives

Australians struggling with the cost of living are being told there’s a way to give themselves a $20,000 pay rise without asking their boss.

Property investment group OpenCorp said the key lies in how the tax system treats investors who provide housing.

With the average couple expected to pay about $1.8m in tax over their lifetime, OpenCorp executive director Michael Beresford said many households are overlooking deductions that could cut thousands off their annual bill.
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“Most Australians don’t realise their biggest expense isn’t the mortgage, the car or the kids, it’s tax,” Mr Beresford said.

“When you own an investment property, there are deductions available that reduce your taxable income.

“For many households, that can be worth the equivalent of $20,000 a year.”

OpenCorp executive director Michael Beresford says smart use of tax deductions can unlock the equivalent of a $20,000 pay rise.

Mr Beresford said that over two to three decades, investors who build and hold a small portfolio could also save more than $1m in avoided tax.
“Depreciation, rental offsets and other deductions can add up to several million dollars over time,” he said.
“It’s not a quick windfall, it’s a long-term strategy.”

But he warned that too many Australians undermined themselves by making the wrong financial moves.

Common mistakes included paying off the family home first, not using depreciation schedules, and selling too early and triggering a large capital gains bill.

Finance Society founder Sarah Smelt says younger buyers are turning to rentvesting as affordability pressures reshape the market.

Finance Society founder Sarah Smelt said younger buyers were already experimenting with strategies such as rentvesting.

“Rentvesting lets people enjoy the lifestyle they want near schools, transport or the beach, while still building equity somewhere else,” Ms Smelt said.
“Many first-home buyers struggle with a “champagne taste on a beer budget, when I was 21, I bought a modest two-bedroom unit because that was all I could afford.
“Now I hear people saying they can’t find anything under $1m. Social media has raised expectations to unrealistic levels.”

Soaring household bills are driving more Australians to seek property strategies that deliver extra cash flow and long-term security.

Ms Smelt said some younger buyers were unwilling to compromise on everyday spending either, which made saving and buying harder.

“Our parents’ generation would go without to get a home, no takeaways, no extras,” Ms Smelt said.

“Now people don’t want to cancel a streaming subscription, even while saving for a deposit.”

While critics argue rent money is wasted, the Finance Society founder said rentvesting could be a practical compromise.
“If you’re rentvesting, you’re still paying rent, but at the same time you’re building equity in your own property,” Ms Smelt said.

“It’s a way to get started rather than sitting on the sidelines.”

Experts warn many families are overlooking deductions and strategies that could be worth thousands of dollars every year. Picture: iStock

Ms Smelt said about one in five of her clients were already using the strategy and expected that share to grow as affordability pressures spread.
“It’s not one-size-fits-all, but for many it’s the stepping stone that gets them into the market,” she said.

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