A Finance blog by Paul Bennion.
Apartments and units offering higher rental returns and lower maintenance costs are now the preferred asset choice for property investors throughout Australia.
According to the latest figures from Australian Property Monitors, rental returns for apartments are now higher than houses in most capital cities.
In Sydney, rental returns for apartments have reached 5.19% compared to 4.65% for houses, while in Perth rental returns for apartments are ever higher at 5.77%, compared to 5.27% for houses.
However, the largest differential is in Darwin, where annual rental returns for apartments are 6.22% compared with 5.20% for houses.
According to Paul Bennion, Managing Director of tax depreciation company, DEPPRO, higher rental returns are a major reason why more than 40% of the tax depreciation reports carried out by DEPPRO are for property investors buying these higher density homes, rather than traditional houses.
“In addition to higher rental returns, apartments and units are favoured by investors because of low maintenance costs and the fact that family sizes are getting smaller,” Bennion said.
According to Bennion, the period leading up to and after the start of the new financial year typically generates a frenzy amongst property buyers wanting to purchase apartments and take full advantage of the tax benefits.
More than 70% of DEPPRO’s property depreciation reports for apartments are prepared during the months from April to September.
“Anyone who is considering buying an apartment for investment purposes should therefore consider making a decision now, rather than waiting until later in the year.
“Buying an apartment can provide a tax payer with considerable depreciation benefits because of the significant tax benefits they offer through depreciation,” Bennion said.
People interested in purchasing any investment property should consult a professional tax depreciation specialist, such as DEPPRO, to prepare a comprehensive depreciation schedule for the property, Bennion recommends.