Dale Alcock, Managing Director of the ABN Group and Peter Gianoli, General Manager of Investor Assist talk about two of the benefits of building a property for investment purposes versus investing in established homes. The two main factors - depreciation schedule and maintenance.
DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.
Transcript: Peter Gianoli and Dale Alcock share their thoughts on the depreciation schedule of a new house
Peter: There are two answers to that. There's an emotional answer, and there's a statistical or numerical or financial answer. Start with the emotional answer. The newest house on any street is always the easiest, to rent out to a tenant. People just attract themselves to shiny new things. That's the emotional answer. The financial or numeric structural answer is that a brand new house has maximum depreciation available for taxation purposes. So in the first five years of any home's life it's maximum depreciation. After five years, you drop back to a lower level of depreciation. So if you're a property investor and you buy a six-year-old home you're forgoing five years of accelerated depreciation, versus if you buy brand new you get that sweet spot for five years.
Dale: And the other major factor, of course the obvious one, is you're not into maintenance straight away. You know, you buy an established property it might be some years old, the next thing that happens the hot-water system's gone, you know you got to replace the gutters. You know, anything and everything will and can go wrong; whereas, if you buy a new property it's under a new home warranty, everything's brand new, and you're not getting that real heavy maintenance bill up front.
1 min 42 Seconds
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