What is a Holding Cost?

The term ‘holding cost’ describes the weekly after-tax cost of holding an investment property.

The rental income from a property will often not cover the full cost of finance and the shortfall must be covered – however the shortfall amount is effectively reduced by certain tax implications usually attached to an investment property. The end result is that the expense of servicing the borrowings attached to the investment property are reduced to “Lunch Money” amounts when considered on a weekly basis.

You may find this Blog Post of interest:

http://lifecorp.com.au/affordability-the-4-things-i-test-every-time/

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