How Property Investors Can Reduce The Taxation Burden

For the average Australian looking to build a secure base for his/her retirement, premium property investment may have the potential to provide the means, however whilst great returns may look promising, exorbitant stamp duty costs have become increasingly burdensome for even the most savvy investor.

Stamp duty for property purchase in larger capital cites may see averages of more than $30,000 of the investor’s funds, which could have been used to purchase a tangible asset like a car, or renovations to an existing home.

State governments particularly in NSW and Victoria are currently collecting substantial funds from property taxes, and whilst ever property prices are on the rise this is likely to continue as stamp duty and the like are calculated on a scale relative to the valuation/purchase price.

As government moves to phase retirement pensions, forcing the population to create their own private wealth to fund their futures, property is still seen to be the most secure investment in our futures, albeit though it comes with significant initial expense.

Between all levels of government more than $45bn annually is collected in property taxes, which have risen by 42% since 2010 compared to total GST collections, which have only increased by around 17%

To ease this large taxation burden, more and more property investors are taking advantage of legitimate tax benefits that flow from investing in property. In fact, just one tax depreciation report for an investment property can generate thousands of dollars in potential tax savings annually.

Tax depreciation benefits associated with owning investment properties can be equivalent to approximately 60% of the annual rental income of an investment property. For the initial cost of a tax depreciation report (which is required to be undertaken by a qualified professional), clients can enjoy thousands of dollars in tax benefits each year from their investments by legitimately claiming their full depreciation allowances.

It is important to seek the advice of a good Financial Advisor who will work collaboratively with your accountant to ensure that the full taxable benefits are realised on the purchase of your investment property.