Cashflow Analysis of New Vs Established Property Investment

26th of September, 2014

Topics Covered in this presentation are:

  • With better depreciation deductions and a superior return on new stock, an investor can more easily service their property portfolio.
  • The construction costs on a new 2 bedroom apartment are just as much if not more than a 3-4 bedroom project home.
  • You cannot depreciate the land component. With older houses, the majority of the purchase price is represented as land value.
  • For income earners on the higher marginal tax brackets, holding a portfolio of new residential property will have minimal impact on their after tax cash flow.
  • For the same after tax cost, you can hold a significantly larger portfolio of new residential apartments compared to older houses.
  • It is also pertinent to mention LAND TAX. With apartments, the land component is smaller. You can often hold a larger portfolio of apartments before you run into land tax implications. It is also noteworthy that Land Tax is a state based tax, so diversifying between the states over time is also a good strategy.

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Disclaimer: Any opinions or recommendations expressed here do not purport to Financial Advice but rather should be considered General Advice and does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate to you and whether you should act upon it. Should Financial Advice be sought, we suggest you seek such advice from an appropriately qualified advisor. Any growth rates, yields, rental income, tax rates, interest rates, depreciation rates, inflation rates Dividends per Share (DPS) and Earning Per Share (EPS) etc shown are estimates only and should not be used as a guide to future performance. Past performance is not necessarily a guide to future performance and should not be relied upon for this purpose. Authorised Representative of PGW Financial Services Pty Ltd – AFSL 384713 ABN 15 123 835 441.