The decision by the RBA to cut interest rates over the past year is having a positive impact on the property investment market in Australia.
Blogger: Paul Bennion, DEPPRO tax depreciation specialists
ABS figures for new investment home loans show that they jumped on a monthly basis by nearly $1 billion during the past year.
The latest ABS data shows that during October 2012, home loans valued at $6.12 billion were secured by property investors to purchase established homes.
This compared to home loans valued at $5.2 billion during October 2011. Lending to property investors has steadily increased during 2012 from a low of just $4.95 billion which was recorded in January.
2013 is shaping up to be one of the most positive years for the property investment market in Australia during recent times.
We are now living in an environment of falling interest rates and property investors can look with some confidence to further cuts in the cost of borrowing during 2013.
These very low interest rates, combined with high rental returns, means that property will again emerge as a blue chip investment choice for many Australians.
In a growing number of capital cities in Australia, rental returns are now well above 5% and even higher rates of returns can be achieved in regional cities which are linked with the resources sector.
2013 should see the emergence of a growing number of new first time property investors who have not bought an investment property before.
One of the most common mistakes that first time investors make is not to claim their full tax depreciation benefits associated with owning an investment property.
Many of these first time property 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.
A large proportion of these tax benefits are never claimed which means that each year hundreds of millions of dollars in tax benefits are lost by investors not claiming their legitimate entitlements.
Property investors can fully maximize these depreciation benefits by obtaining a depreciation report of their investment property from a member of the The Australian Institute of Quantity Surveyors (AIQS).