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CPPA Blog

Property Investment Success Stories and Tips on Maximising Your Profits

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New Beats Old Hands Down

One of the most critical factors when it comes to investing in real estate is to know the financial performance of your investment.

Let's face it, we only ever go into an investment for the money it will make us.

There's one huge difference that new property delivers over and above older property. It's Depreciation. There's so much more depreciation allowed on a new home, than there is on any existing older home.

Think of it this way... inside the new home is a bag of money- $50,000 or thereabouts (based on a $500,000 home investment). That $50,000 is yours- the bottom line difference to your returns over the first 10 years of your investment. (Sure this number varies based on construction, finishes & window dressings etc).

Yet you won't find that depreciation in an older home. You'd be lucky to get a quarter of that is some situations. This is because the vast majority of depreciation occurs in the first 5 years.

To make depreciation work for you, you need a professional to prepare a depreciation schedule for the particular home. This sets out the depreciation allowable for each year of ownership. As a convert to depreciation schedules... I regret wasting so many years without them. It literally saves me $20,000 a year in tax across my portfolio.

Stamp Duty Differences- Another $4,000 or so

Stamp duty is also a big consideration when you buy a property. When you buy an existing property, you pay stamp duty on the total purchase price. With a house and land package, you only pay stamp duty on the land component.

Modern Designed Home

Experience tells us that people want open plan modern homes, not poorly planned older homes. With a house and land package, you also get a new, up-to-date house with all the latest features. This means that your property will be more attractive in the marketplace for any future resale.

Fewer Maintenance Issues

With an existing property, you almost inevitably run into problems – renovation, maintenance, equipment breaking down, perhaps even termites. You virtually remove these concerns with a new house and land package. For example, a new house and land package covers you for a 6-month maintenance period, appliance warranties and a 6-year builder’s warranty.

If you want information on investing in house and land packages talk to one of our client managers.

 

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The information contained in this website is general in nature and may not be relevant to your individual circumstances.
You should refrain from reliance on this information without first obtaining suitable professional advice. **Our investment strategies are based on purchasing a brand new Investment Property, involving interest only borrowings, appropriate financial gearing, anticipated rental income, and tax incentives to achieve a low-cost affordable outcome.The example of $10/week to service a $400,000 investment property, is based on outcomes achieved for several of our clients. It may not be the case in your situation, and results will vary based on your taxable income and individual circumstances.

Copyright: - Capital Property Partners Australia Pty Ltd - 2016 - ABN 73 167 809 430

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