Investors

Property investment has long been recognised as comparatively safe and efficient method of wealth creation. Historically low interest rates, high rental demand and a growing population coupled with a massive undersupply in housing are all reasons why Australia’s leading forecasting group BIS Shrapnel has predicted a market recovery of as much as 20% by 2012.

Why build your investment?

Value
In many areas of NSW it is still possible to build new for less than the comparable established dwelling.

Save Stamp Duty
Stamp Duty is only payable on the land component.

Tax Minimisation - Maximum Depreciation
New homes provide maximum depreciation – a critical element to tax minimisation strategies.

Rental Returns
Attract a better tenants and higher rental returns

Low Maintenance
New homes come with a warranty and require less maintenance

Negative Gearing

Negative gearing is the process by which the taxable loss derived from owning an investment property is used to offset against your other income, this reducing your overall tax liability. Below are some examples of expenses which are generally tax deductible:

  • Interest
  • Depreciation
  • Letting and management fees
  • Rates and community levies
  • Maintenance and repairs

When a loss is a good thing

Described as “the phantom cash flow” (Robert Kiyosaki), depreciation is simply the decline or loss in value of the improvements of your investment property. The depreciation loss, whilst not a cash loss is able to be added to the tax deductions you claim against your investment property.

New properties yield the greatest depreciation which can significantly contribute to your investment by reducing your tax liability.

A Worked Example

Below is an example of negative gearing with depreciation.

Investors A

A new investment property for $39 per week!

Assuming the investor in the example has an income of $80,000

Investors B

NOTES & DISCLAIMERS

  • This is intended as a broad overview for your assistance. It does not take into account your individual circumstances and is not to be relied upon as an exhaustive financial analysis. This does not constitute financial advice of any nature.
  • The exact amount of income tax can only be calculated upon lodgment of your income tax return.
  • This estimate does not include any applicable Medicare levy, Medicare levy surcharge, Higher Education Loan Programme (HELP), or Student Financial Supplement Scheme (SFSS) liabilities.
  • The actual tax on your income may be higher than the calculated amount shown above
  • Some tax offsets are available that may reduce the amount of tax you have to pay, for example:
    • the senior Australians tax offset
    • the pensioner tax offset
    • the beneficiary tax offset
    • the low income tax offset
    • the private health insurance tax offset
    • the spouse tax offset, and
    • the franking tax offset.
    • Family tax benefit and baby bonus are not taken into account in this tax calculation.