A Property blog by Paul Bennion.
DEPPRO has a recorded a strong jump in the number of depreciation reports undertaken for investors buying properties in more affordable coastal suburbs in Perth.
For example, the number of tax depreciation reports undertaken for investors buying properties in cheaper coastal suburbs has jumped by more than 30% during 2014.
DEPPRO is finding that more investors are buying properties in these more affordable coastal suburbs because properties are still competitively priced and rental returns are relatively high.
A large number of homes in more affordable coastal suburbs can still purchase properties in the area for under $450,000.
These suburbs include Craigie, Clarkson, Kinross, Heathridge, Padbury, Beldon, Hamilton Hill, Spearwood, Hilton Safety Bay, Warnbro and Waikiki.
Property investors are attracted to these more affordable coastal suburbs because over the longer term then can deliver high rates of capital growth.
For example, the suburb of Craigie, which has a median house price of $500,000, has achieved an annual increase in the value of properties of 9.9% over the last year which was much higher than the Perth average growth rate of 6.5%.
In the southern suburbs, property values in the coastal suburb of Safety Bay, where the median house price is just $435,000, the median house price surged by 11.2% over the past year.
DEPPRO is finding strong demand by investors for newer homes in these more affordable coastal suburbs because newer properties offer the maximum tax depreciation benefits. These tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property.
However, older properties also can deliver property investors significant tax depreciation benefits and DEPPRO has undertaken a large number of tax depreciation schedules for clients who have purchased homes more than 20 years of age in more affordable coastal suburbs during recent months.
Currently, DEPPRO estimates that only a small minority of property investors claim their full tax depreciation benefits by obtaining a Depreciation schedule from an authorized company.
The cost of this tax depreciation schedule is fully tax deductible even though the cash flow benefits it can deliver each year may be several thousands of dollars for each property.
However, to quality for these major tax benefits through depreciation, property investors in Western Australia have to ensure that they comply fully with the guidelines set down by the Australian Taxation Office.
The Australian Taxation Office has very clear sets of guidelines and procedures that must be followed in order to achieve the maximum legal tax deductions that cover all areas of investment property ownership.
Anyone who is considering using the services of a tax depreciation company should ensure that they are a member of The Australian Institute of Quantity Surveyors (AIQS). The AIQS ensures that its members, such as DEPPRO, maintain a high level of standards and services.
Membership of the AIQS is restricted to companies that have the appropriate educational qualifications and who have demonstrated the required level of professional competence after a statutory work period.