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During the second half of 2013, DEPPRO recorded a significant upswing in activity by property investors in all key property markets throughout Australia and we expect this trend to continue into 2014.
Blogger: Paul Bennion, Managing Director, DEPPRO tax depreciation specialists
There is renewed confidence amongst property investors and this trend is underlined by the latest ABS lending figures for property investment loans.
These ABS figures reveal that during September 2013, the value of property investment loans totaled $7.63 billion which compared to $5.88 billion for September 2012 – rise of $1.75 billion in loans.
The tri-fecta of low interest rates, high rental yields and rising property prices are driving this renewed confidence in the property market.
In particular, DEPPRO has recorded growing levels of activity in the Queensland property market which has been subdued over recent years.
Property prices in Queensland and in particular Brisbane are now very competitive compared to the other major capital cities in Australia. For example, the median price of a home in Brisbane is around $200,000 lower than the median price of a Sydney home.
Brisbane is therefore poised to become a star performer of the Australian property market during 2014 as investors take advantage of high rental yields and the potential for strong capital growth in this re-emerging property market.
Investors wanting to take advantage of opportunities in the Australian property market during 2014 should ensure that they boost their cash flow through obtaining their full tax depreciation benefits.
In doing so, this will mean that they can more quickly build a property portfolio and achieve wealth creation in a shorter period of time.
It is estimated that only a very small proportion of residential investors make use of the tax depreciation entitlements which are available to all investors on all investment properties.
Many investors fail to understand that the tax benefits from depreciation can be just as important as rental income and that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property.
Property investors who have a portfolio of investment properties should also realise that they can claim tax depreciation benefits retrospectively if they have not done so in the past. DEPPRO has been able to assist property investors who have several investment properties achieve tax benefits of over $100,000 by claiming depreciation allowances for previous financial years.
While tax depreciation benefits are most generous for new properties, older properties can also qualify for significant tax depreciation benefits.
For example, a property that is more than 50 years of age could still qualify for thousands of dollars each year in tax depreciation benefits for the owner.
Anyone who has purchased an older property for investment purposes should therefore carefully consider the significant taxation benefits that can be achieved before beginning any construction work.