Hi Fudge111,

Residential buildings built after 17 July 1985 depreciate by 2.5% per annum of the original construction cost. This can be claimed for a total of 40 years with year one providing you with the highest claims.

Because you receive the most depreciation in year one, buying a brand new property or a property off the plan allows you to reap in these savings, which an older property won’t be able to provide you with (unless you renovate it, or it has been renovated). Also, say you purchase an established property that was built in 1987, this makes the property 28 years old this year, meaning you only have 12 years left to claim depreciation.

You can claim depreciation on internal fittings and fixtures, which includes things like carpets, air-conditioning systems, blinds and microwaves. These can depreciate from anywhere between 10% to almost 40% per annum for the first five years depending on the initial cost. If these items cost less than $300, these costs can be claimed straight away.

As Corey mentions, it is best to seek the advice of a Quantity Surveyor and get a depreciation schedule drawn up to know exactly what you can and cannot claim.

Don’t forget that depreciation is a way to reduce your taxable income and can only be claimed on investment properties that are producing an income, but you should not be solely buying an IP based on reducing your tax.

Hi Vincenza,

It is important to do your research, no matter what you choose to invest your money in. In this situation, you should be taking into consideration areas where high growth is expected (capital gains potential), as well as looking for areas with high rental income and taking note of the area’s vacancy rates. The higher the vacancy rate normally indicates a less desirable area and could make the property difficult to sell in the future.

Buying a holiday home or in resort apartments always brings the risk of seasonal demand. You might receive great demand during the peak season, but for the whole financial year these returns may not average out to very much, especially if you have a slow season and low demand.

You should also bear in mind strata costs. If the complex you are looking at has a swimming pool or a gym for example this will push up these running costs. Wear and tear is also another issue, especially if you have lots of people renting out your apartment for short time periods.

Finally, there might be future developments proposed for the resort, and as a private investor, it might be likely that you will have to contribute to the upkeep as well, especially as a resort will want to remain attractive to appeal to its guests.

I’m not saying that investing in a resort is a bad idea, but you should be very wary and weigh up all the pros and cons to suit you.

Hi Richard,

Buying properties Off the Plan has many advantages compared to buying established properties. Some of the main advantages include higher tax deductions and depreciation savings, reduced maintenance costs, higher rents due to many tenants preferring new property; long construction time allows for capital gains to occur whilst you are not paying a mortgage as well as these properties generally being well designed for today’s client and can be more energy efficient.

While these are advantages to the clients we deal with, OTP isn’t for everyone.

As I mentioned earlier, buying Off the Plan in Brisbane is a smart move right now due to Brisbane being in the upswing.

Myself, along with my staff have purchased OTP apartments in Brisbane, so our recommendation is backed by our personal commitment.

In regards to our fees we do get paid as a company by the developer, but our consultants get a flat fee to service the client and are not driven by commission incentives, but rather by happy clients that refer them more business.