Why the time to invest in property and develop really is now
Are you considering joining the many hundreds of thousands of Australians who have become successful property investors? Or considering adding to your property portfolio? Here’s a tip: if you are ready to buy but waiting for the right moment, that moment could be now. Or more specifically: between now and the end of the financial year.
Bring forward your investment property tax benefits
You can’t necessarily time the peaks and troughs of the property market. You can, however, time the purchase of an investment property to maximise your taxation outcomes. And that opportunity exists between now and 30 June 2012. With only a little over two months until the end of the financial year, you could be putting yourself in a position to bring forward a host of taxation benefits.
Of course, the aim of every property investor is to achieve long term capital growth; tax benefits shouldn’t be the primary goal. However, investing in property involves significant up-front costs and, while we expect those costs to be recouped many times over, a short-term cash flow boost would be welcomed by most investors.
Know your deductions
The types of investment property expenses you’ll be able to claim right away include property management costs such as advertising for tenants, body corporate fees, council rates, insurance premiums and a depreciation report… potentially thousands of dollars worth of tax deductible expenses. The law states these expenses are deductible provided the property is “up for rent.”
You may be able to improve your taxation outcome even more, by talking with a specialist financial advisor such as Resolve Finance about pre-paying interest on your investment loan. This could bring forward some of the tax deductions you would otherwise be entitled to next year.
For the ultimate in efficient property investing at tax time, focus on new properties
Be careful that your tax-time windfall is not consumed by short-term costs associated with your new investment property. Consider the merits of investing in new or recently completed properties and house and land packages, as opposed existing properties.
New properties are typically more desirable amongst tenants, can be purpose-built for tenant markets with features such as low maintenance gardens, and are unlikely to require remedial work to bring them up to scratch for leasing (remembering that costs for initial repairs on an investment property cannot be recouped, as they are not tax deductible).
And importantly, new houses receive the full depreciation allowance on building costs and fixtures and fittings from the Australian Taxation Office – another way you can maximise your taxation outcome.
At the end of the day, there are plenty of reasons to invest in property, and tax savings may be only one of them.
However, it may be worth your while finding out how much better off you’ll be in the short term, if you invest before 30 June. If you’d like to know more, get in touch with Investor Assist today to speak with one of our team. For any accounting matters, be sure to speak to your Accountant.