IN BRIEF
Make the most
of tax deductions
PROPERTY
TOP4CHEAPEST
3-YEAR FIXED
HOME LOANS
Homestar Finance
3.84%pa, 3.63%pa
AAPR^1 ,nomaxlump
sum payment;Pacific
Mortgage3.82%pa,
3.66%pa AAPR^1 ,no
additional repayments
allowed;iMortgage
3.84%pa, 3.89%pa
AAPR^1 ,no max lump sum
payment;Freedom
Lend3.79%pa, 3.90%pa
AAPR^1 , $20,000 max
lump sum payment.
Source: Canstar as at 18-
Apr-17, ranked by AAPR.(^1) AAPR on $150,000 loan
for 25 years.
W
ith tax time around the
corner,propertyinvestors
should thinking about getting their
depreciationscheduleinorder.Data
from BMT Tax Depreciation Quantity
Surveyors shows that even older
properties can provide investors
withlucrativetaxbreaks,withall
properties, of varying ages, receiving
an average first full-year deduction
of over $9000 last financial year.
Deductions are typically higher
for newer properties, as owners
are entitled to claim capital works
for40yearsaftertheconstruction
date.Ifyourecentlypurchasedan
older dwelling (still constructed after
September 15, 1987), you have only
the 40 years from the construction
datetoclaimcapitalworks,soiftime
is running out it’s worth seeing what
youcangetbackthisyear.Despite
this,BMTdatashowsthatthe
newer/older property split among its
clients was relatively even in the last
financial year.
While there are restrictions on
capital works deductions based on
the age of the property, there are no
restrictions for plant and equipment.
According to BMT, between 15% and
35% of the construction cost of
a residential building is made up of
plant and equipment such as hot
water systems, heaters, solar panels,
air-conditioning units, blinds and
curtains, light shades, swimming
pool filtration and cleaning systems,
and security systems.
I
fyou’redauntedbythecostofAustralianpropertyandhavethought
about getting into the international real estate market, now might be
thetimetodoso.AnewwhitepaperfromAMPCapitalrevealsthatUS
apartmentrealestateinvestmenttrusts(REITs)aresettobenefitfrom
the mass migration of gen Y into rental accommodation. US apartment
REITs make up around 8% of the global real estate benchmark,
which is equivalent to more than $US100 billion ($132 billion) of
equity market capitalisation. The paper shows that the most popular
destinationsforUSrentersareMiami,NewYorkandBoston.
ChrisDeves,managerofAMP’sgloballistedrealestateportfolio,
says the rental boom is positive for both landlords and investors in
listed property trusts with exposure to key urban centres. “Apartment
REITs are generally high quality and consolidation in the sector
has left a set of large, well-capitalised companies with seasoned
management teams, making them attractive for real estate investors
with a long-term investment horizon,” he says.
XMORE
PROPERTY
STORIES ON
P60-
COMPILED BY STEPH NASH
US apartments appeal
DEPRECIATION
Not such
a super idea
A
s part of the May 9 budget, federal
treasurer Scott Morrison has raised the
possibility of allowing first-home buyers to
dip into their super. Whether this happens
ornot–andatthetimeofwritingprime
minister Malcolm Turnbull poured cold water
ontheidea–it’sinterestingtoconsiderhow
many people this measure would target.
Martin North, principal of Digital Finance
Analytics, says most prospective purchasers
wouldneedadepositofatleast$50,000to
get into the current market. His data shows
thatofthe140,000-plushouseholdsintheir
early30swhowanttobuyaproperty,less
thanhalfhaveasuperbalanceofatleast
$50,000.Thisfigureisevenlessforthosein
their late 20s. Younger households, who are
more inclined to buy property, typically have
lower super balances because they haven’t
beeninthesystemlongenoughto have
benefited from compounding.
Capital works: what you can get back
PROPERTY AGE CONSTRUCTION DATE PERCENTAGE OF CLAIMS^1 AVERAGE FIRST FULL-YEAR DEDUCTION
Old Pre-1987 22.3% $
Pre-2000 1987-2000 16.9% $
Up to 15 years old 2000-end 2012 26.0% $11,
Fairly new 2012-2015 13.3% $12,
Brand new Built after 1/3/2015 21.5% $12,
Source: BMT Tax Depreciation Quantity Surveyors.^1 Capital works claims by BMT clients in 2015-16 financial year.