In our first instalment of How She Did It, I’m going to share with you my story on how I “technically” don’t pay rent.
For me, the desire to pay down the mortgage and save some money to start Financy.com.au came down to having a brutal and unemotional look at my own numbers with good old pen and paper.
This led me to consider how a seachange away from the big smoke, could allow me to rent out my dream home for significantly more than I would pay in renting a property elsewhere, oh and using tax to help offset your rental costs for a home-based business also helps!
Let’s start with the numbers.
- What it costs me in rent now: $500 per week.
- The amount of rent I can claim as a business tax deduction: $600 – 30% = $180. Which takes my rent to $420.
- What my investment property earns in rental income: $1200, which has already factored in real estate management fees.
- My weekly mortgage repayments on that investment property: $700.
- Crunch time: $1200 – $700 = $500 left to pay for my rent elsewhere.
- But because some of my rent can be claimed as a business tax deduction, the numbers are: $500 – $420 = $80 left over to pay down existing mortgage.
None of this is rocket science, in fact using one asset to pay for its debt, and provide income is a prudent investment strategy.
But often making the decision to rent out the more expensive property can be a difficult one – especially if that property is your dream house or location.
If you’ve got a How She Did It, that you believe might help other women, let us know!