How To Increase Your Tax Deductions

One of the most common questions I receive when talking about investing in property is why do I concentrate on new builds? House and land packages in new estates? Land that hasn't even titled yet?

Now there are several reasons why BUT one of the most significant reasons why is obvious when you understand more.

It all comes down to depreciation OR more simply - the amount of tax deductions you have access to over the life of owning the property.

I know I know, tax isn't the most exciting conversation around however when we're talking about hundreds of thousands of dollars I'll bet I have your attention!

I spoke to my good friend Mike at MCG Quantity Surveyors to see if they could give me a comparison of an existing property currently on the market to a comparable new build to see what kind of figures we're talking about here.

He ran the numbers against a 3 bedroom, 2 bathroom established dwelling vs 3 bedroom, 2 bathroom new dwelling and it turns out we're talking about a $125,000 different in deductions (in favor of the new build)! Of course the numbers would be greater on a 4 bedroom 2 bathroom 2 living area 2 car garage)

But what about why I choose new estates? Well the answer is quite simple. I am accessing land that isn't even available to the public yet. I'm there RIGHT at the start of a new region before it goes boom! Think of the capital growth!

Think about if you could buy a parcel of land where you are currently living, because you love the area, and be able to eventually claim deprecation on the house once it has been built, vs ,buying a a piece of land in a newly growing region.

The first option will mean that you're probably going to be paying a hefty premium for that parcel of land because of the existing infrastructure (and competition) around it.

Personally I would rather the latter. Get in early with an up and coming growth region when land is very affordable and because I plan on sitting on that property for at least 10 years which means I know it's ME that is going to enjoy the growth. What we're tapping in here is FUTURE infrastructure that is coming soon (which is all a part of my P.I.E.S formula).

Affordable house and land that is going to have significant growth over the next 10 years combined with hundreds of thousands of tax deductions - it's a no brainer.

If you want to check out the example report that MCG prepared for me, I'd be happy to show you and answer any questions you might have. Book a time here.

Alternatively I am speaking at an upcoming seminar with the Bendigo Bank at the Knox club in Victoria. Feel free to book your complimentary ticket here and come along and let's chat!

...and remember what Francis Assisi said.. Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.

P.S - The depreciation schedule in this is article is an example based on someone earning $80,000 per annum with 100% lend, plus costs. These figures may differ for your circumstances.