Strong suggestions by the Federal Government that the pension age in Australia will be raised to 70 will only encourage further investment in property as a means for people to fund their retirement.
Blogger: Paul Bennion, Managing Director, DEPPRO tax depreciation specialists
Recent comments by Federal Treasurer Joe Hockey that not only could the pension age be raised, but that the amount paid could be limited over time, sends a clear message to Australians that they cannot rely on a Government funded pension to see them through their retirement years.
Already, the pension age is planned to be raised to 67 years between 2017 and 2023.
The reality is that the Federal Government needs to review spending on their pension scheme because it is predicted that the number of Australians aged from 64 to 84 will double from 2010 to 2050 while the number of people aged over 85 will quadruple.
As people are now living longer due to improvements in lifestyle and medical treatments, more money is now required to fund a person’s retirement.
That is why a growing number of people are now investing in property for long term capital growth and rental income so they have an asset that continues to not only grow in value but also delivers high rental returns during their retirement years.
This trend is underlined by our own figures which show that a rising number of investors own more than five investment properties as they build a successful property portfolio to fund their retirement.
In particular, these property investors want to secure the cash flow from rents that property delivers which can help to fund their retirement. Weekly rents for homes in Australia have risen strongly over recent years and securing the cash flow from rents is now very attractive for investors.
These people are creating wealth to fund their retirement by adopting a professional approach to investing whether is it is carefully researching the property market or through ensuring they claim their full tax depreciation benefits associated with owning an investment property.
As a rule of thumb, tax depreciations benefits can be equivalent to around 60% of the annual rental income of an investment property. Most properties regardless of their age can offer investors substantial tax benefits through obtaining such a schedule.
If you don’t obtain a tax depreciation report then you cannot claim for these substantial tax benefits as the Australian Tax Office requires such as report to ensure that the investor is making legitimate claims.
To protect their interests and ensure that they select a company that is fully compliant with ATO rulings, members of the public should select a company that is a member of The Australian Institute of Quantity Surveyors (AIQS).
AIQS is the professional standards body for quantity surveyors throughout Australia and enjoys a close working relationship with the ATO.