We recently hosted a free property investment seminar, with local property and finance professionals sharing their advice on how to make informed property investment decisions and maximise returns. There was an abundance of great advice and these are the top three takeaways our experts want every property investor to know.
1. Do your research
Location is one of the most important considerations when purchasing an investment property. In addition to looking for an area that fits within your budget, Paul Riga from Urbis recommends researching the long-term growth potential of an area.
Details to research in a suburb or city include:
- Age and income of residents
- Expected population growth
- Nearby employment and education hubs
- Investment in local infrastructure such as roads, transport, community amenities, etc.
Finding areas that are expected to grow and that are also attracting infrastructure development is a good foundation for making an investment that will be sustainable over the long term, while pre-existing employment hubs, schools and universities are likely to attract more residents to the area.
2. Understand the Brisbane property market
When we look at Brisbane, research from Urbis highlights the following key statistics:
- Population is forecast to increase to 1.4 million residents by 2036, resulting in an additional 12,843 residents per annum.
- The highest population growth is in the Gen Y (20–34) age bracket.
- Infrastructure projects with a combined value of almost $20 billion are either under construction or in the planning phase.
These are promising indicators for the city, with the population forecast and infrastructure investment activity underpinning the city’s potential for growth. Compared to Sydney and Melbourne, Paul explains that “Brisbane still represents quality and value for money”.
3. Ensure you are claiming depreciation
Claiming depreciation on a property is one of the major tax advantages of property investment. Unfortunately, 80% of property investors are missing out on property depreciation claims, says Chris Byrne from BMT Tax Depreciation.
As a building gets older, it starts to lose its value and you can offset this by making a depreciation claim on your tax. This allows you to claim depreciation on the plant and equipment (appliances, carpet, blinds, etc.) and on the building itself.
There are a number of factors that affect how depreciation is calculated for each property, but this example gives you an idea of just how much you could be claiming to offset your tax.
New apartment purchased for $450,000
Deduction value in the first year = $13,500
Total depreciation value over 40 years = $310,000
If you own an investment property and haven’t been claiming depreciation or you suspect you could have been claiming more, the good news is you can go back and have your tax reviewed for the past two years.
To make a depreciation claim, you must have a depreciation schedule prepared by a specialist organisation such as BMT Tax Depreciation. Accountants cannot prepare these schedules, however they do need them to prepare your tax claim. To estimate how much you could be claiming, refer to this calculator.
The other key takeaways from the night were on planning your finances:
- Decide upon a financial strategy before you invest in property
- If you have self-managed super, you can use this to purchase an investment property
- Ensure you take out the appropriate insurances to protect the property and your income
This is the first in a series of seminars we are hosting for property buyers in Brisbane. If you would like to be notified about future seminars, complete the form at the bottom of this page to be added to our mailing list.