I recently gave a webinar titled “8 Things You Don’t Know About Depreciation”. The feedback was excellent.
During the webinar, the most insightful topic I spoke about was on the effective life of depreciable items.
(NOTE: Deductions for these plant and equipment items may only apply if you bought the property prior to May 9, 2017 – Read about the Budget changes here).
You see, when you buy an investment property part of the purchase price includes things such as carpet, ovens, blinds and other loose items.
The Australian Taxation Office (ATO) determines how long these types of items will last for. This determination then governs how much you are able to claim annually.
Simply put, if the carpet in your brand new house has an effective life of ten years and has a value of $1,000, you can claim $100 per year over a ten year period. Simple right?
But what happens when you acquire carpet that is seven years old?
Well, you (or a qualified quantity surveyor) can reassess the life of the carpet and assign a new effective life.
For instance, if the carpet is seven years old, you can say the carpet is only going to last for three more years. So now you can claim the remaining value at a rate of 33.3% per annum for the next three years to equal the same deductions you would have received over the ten years.
Effective life deductions can make a huge difference to the annual amount you as a property investor can claim!
Top 20 Property Investment Criteria
Buyers’ agents are constantly asked “where is a good place to invest” and “what type of property do you recommended I buy to maximise my returns?” As a property investor you need to take a step back and ask a more fundamental question…“what do I want this investment property to do for me?”
Taking a strategic approach to investing in property means you need be clear on your goals and the returns you are seeking. Are you chasing high capital growth? Or is positive cash flow your number one priority? Perhaps you are seeking the best of both worlds? When it comes to property investments there is no “one size fits all.” Your financial position, your risk profile, income and equity will all have a part to play in determining what type of property will suit your chosen strategy.
Your property investment strategy will therefore determine what criteria will apply when selecting an investment property. Choosing the right strategy and criteria is so critical to your investment success. No one wants to pick a lemon! So here are some very important criteria that you need to carefully consider when weighing up various property options.
Don’t be swayed by glossy brochures and slick marketing material when choosing your next investment. Look at the fundamental drivers of supply and demand. Examine the data and crunch the numbers. It will make a world of difference when you look back in seven years time.
There are three broad categories that you must consider when evaluating investment property. These are:
- The location
- The market drivers
- The individual property
Read the full report here:
Top 20 Investment Criteria-Report-Wash Brown
This report has been compiled by our good friends at www.propertybuyer.com.au