A Finance blog by Paul Bennion.
Rising property taxes are now emerging as a major financial burden and drain on the cash flow of many Australian property investors.
Figures from the past 10 years show that overall annual property taxes have increased by over $14 billion or 74%. Local Government has imposed the biggest jump with these property tax collections doubling over the last decade from around $6.8 billion to $12.4 billion annually.
Last financial year, property owners paid $33.2 billion in property taxes to State and Local Governments throughout Australia. According to 2010-11 taxation revenue figures from the Australian Bureau of Statistics, Local Government rates totalled $12.4 billion, Stamp Duties totalled $12.3 billion, and Land Taxes amounted to $6 billion. Property owners also paid a range of other smaller property taxes.
First-time property investors should be aware of the ongoing Government taxes associated with owning a rental property. An investor may be faced with taxes totalling thousands of dollars, many payable mid-year to coincide with the start of the new financial year. This can have a major impact on cash flow and budgeting.
In addition, with property taxes generally rising year on year, investors now have to find additional funds each year to cover the increasing costs.
Investors can ease the burden of property tax payments by ensuring they claim the full tax benefits associated with owning an investment property, including depreciation costs. The thousand of dollars an investor can earn in tax benefits as a result of legitimate property depreciation may help to offset annual Government taxes and other payments.
To order a tax deprecation schedule for your investment property contact DEPPRO today.