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To state the obvious, capital growth is what your'e after , not income as I imagine the reason you are up north is for the big coin.
Infact the extra coin is probably the reason for your ability to purchase again, and subsequent desire for tax benefits (minimisation).
So forget the northwest option, as you will be paying huge money for a modest home, albeit returning insane rents.
This is a better option for people with an income focus.
So take a "fundamental approach" and stick to looking in areas with substantial redevelopment potential and subsequent high capital growth prospects.
Obviously the location and land content will be the critical element of your success, so don't worry too much about the house or the likely returns. As long as the property is serviceable and you can derive a reasonable rent , then capital growth will be almost a certainty and take care of itself.
That said, anything within 10km of the Perth CBD, close to swan or canning rivers or the beach has got to be a good bet.
Any land with at least duplex or triplex potential is a good thing. Beyond this you will find the yields will diminish excessively with substantially higher land values. Future redevelopment will also require huge dollars, perhaps beyond your means.
If development is not your thing, then stick to the same areas above and buy with a view to obtaining "good value".
Simply put, search for property which is undervalued relative to others in these areas or has high land value relative to the purchase price. This property will likely have good land content which will ensure good capital growth.
I'd also seriously consider interstate, as there really is better value outside W.A at the moment.
Affordability is a key factor for growth potential and this is a real problem for Perth residents.
Happy hunting !Mike
Well almost !! …… So
If no claims were made (assuming ithe property was purchased post 13 May 1997, and was eligible for CCWO as construction commenced post 18 July 1985), then how does the tax department assess the building cost given that a figure was never determined at the time of purchase ?
Also I can't believe that the amount effectively recouped applies whether or not the CCWO is claimed or not.
I would have thought that if a taxpayer elected to claim, then sure recouped amounts come into play at the time of disposal, but if no claims were made then likewise no adjustment would be necessary ?Surely this is the "sting " I referred to at the start !
trajik wrote:Even though the building write off is recouped upon sale, you have claimed it during the life of the investment at your full marginal tax rate, but get a 50% CGT discount on sale.
The time value of money also places a greater value on claiming as much as you can as early as you can.
And lastly, the building write off is recouped even if you haven't claimed it, although there is now a concession if there is a good reason for not having claimed it.
Generally, the $500 depreciation report will be more than compensated by the increased tax refunds from the depreciation claims. And it is also tax deductible itself, so really $500 is probably costing $350 after tax. A $100k building cost gets you a $2,500 write off each year which is like $750 in the pocket. Thats not including the depreciation on other chattels.You state that the building write off is recouped even if you haven't claimed it.
Can you explain this further ?
