Are you looking
for an investment ?
From as little as $49 / week
you can own an investment property in the prestigious Edgewater Estate.
Inner city apartments remain a great way to invest and build your wealth. Melbourne is continuing to experience low vacancy rates and good gross rental yields. Inner city apartments have also had strong capital growth over the past decade and, in particular, the up-market Edgewater precinct within Maribyrnong has had good growth over the last 3-5 years. Apartments are also a great way to investment because they are low maintenance compared to houses.
On top of this, and importantly, there are significant tax advantages and incentives in investing in residential property. There are very substantial stamp duty savings, as well as being able to claim depreciation on the apartment (because its new – so this is not available when purchasing existing property), and of course negative gearing that enables you to deduct any loss on the difference between your rental and interest expense against your other income. See below for more detail on this.
What does this mean?
It means that your purchase and ownership of an investment property is mostly paid for by the tenant (rental) and secondly by the government (through tax savings) and lastly by you!
Depending on your income, you could pay as little as $45 per week to own an apartment*.
Please contact Bryce at Look Property Group and he can tailor a property investment analysis (PIA) that is specific to your income and circumstances, and determine which property investment will work best for you. Contact firstname.lastname@example.org or call him on 0412 056 838.
What is Negative Gearing?
A rental property is negatively geared when it is purchased using borrowed funds and its expenses exceed the rental income resulting in a loss being incurred. The advantage of negative gearing is that it allows an investor to offset the cost of owning the property (including any interest paid on a loan) against the owner’s assessable income, leading to a reduction in tax payable or a larger tax refund. As a property investor any payments you make for loan interest, borrowing expenses, agent fees and commissions, advertising, legal fees, owners corporation fees, council rates, insurance and land tax are tax deductible.
Negative gearing deductions are particularly beneficial for investors in high income brackets paying the top marginal tax rate.
What is depreciation and how does it benefit me?
The Australian Taxation Office also allows deductions for certain capital expenditure incurred in the construction of new buildings. Capital works receive a deduction based on 2.5% per annum of the initial construction cost – essentially, the newer the property, the greater the depreciation. Deductible capital expenditure includes preliminary costs such as architects fees, engineers fees and building approval fees, in addition to actual construction costs.
In addition, property fixtures and fittings are treated as plant and equipment by the ATO, and a deduction for depreciation is allowed based on the effective life of those fixtures and fittings. Plant and equipment items include (but are not limited to) hot water systems, carpet, blinds, ovens, cooktops, freestanding furniture and air conditioning.
Being aware of the claimable deductions for construction expenditure and fixtures and fittings can contribute considerably to the after tax return on a rental property and should be taken into account when deciding on the purchase of a property.
* This is based on a $450,000 apartment price, and assumes you are on a marginal tax rate of 38.5% and is the weekly cost in year 1.