Warren Buffett has been attributed to the following quote in relation to investing:
“Rule Number 1 – Never lose money.
Rule Number 2 – Never forget rule Number 1.”
One way to achieve that goal as a property investor is to buy property below what it actually costs to build – and get the land free! And now’s the time to do it!
This is the first time in 20 years that I’ve seen investors purchasing property at close to the construction cost…sometimes even below what a property costs to build.
A recent report by Landmark White (Property Advisory Group), highlights that almost 29% of commercial properties advertised for sale in June were mortgagee in possession or in receivership.
So it’s worth remembering Paragraph 17 of Tax Ruling 97 / 25 from the ATO:
“Where a taxpayer purchasers capital works at a price lower than the construction expenditure for those works, the deduction for the capital works is calculated by reference to the construction cost, not the purchase price.”
I recently signed off on a report in Noosa, where the property originally sold (4 years ago) for $1.2M.
Our client just paid $450k for the property.
We estimated the original building cost was approx. $700k – and that’s the number our client will base the deductions on!