A Property blog by Paul Bennion.
Because of regular publicity about the stock market, many people mistakenly believe that it is the biggest investment market in Australia.
The reality is that residential real estate dominates all forms of investment in Australia with a current collective value of $5.5 Trillion.
Investment Markets in Australia by total Value
| Residential Property | $5.5 Trillion |
| Superannuation | $1.8 Trillion |
| Stock Market | $ 1.6 Trillion |
| Commercial Property | $0.7 Trillion |
* Source RP Data
In fact, the value of the residential property market is nearly three times larger than the stock market which comes third in overall value next to Superannuation and then residential property.
The residential property market is huge with stakeholders ranging from mum and dad home owners to investors who own several properties.
This sheer size of the residential property market and its significance the overall Australian economy means that government is very sensitive to policy settings that might have a negative impact on it and this gives property investors a great deal of protection.
Australians love property because it is a safe and proven way to create personal wealth. It also has been shown to deliver a better return than the stock market over the long term.
The results over the past 20 years reveal that Australian residential property returned a 9.9 per cent gain, beating both Australian shares at 8.7 per cent and global shares at 8.0 per cent.
In addition, investing in property allows people to claim generous tax benefits associated with negative gearing as well as depreciation.
The tax benefits associated with tax depreciation can be very signification with DEPPRO clients achieving tax benefits obtained through depreciation equivalent to 60% of the total purchase price of the property. In some cases these tax benefits can total $300,000 based on a purchase price of $500,000
Many investors in Australia totally underestimate the number of items that can be depreciated for tax purposes and this comprehensive list can even include garden gnomes, cubby houses and if they own an apartment, then common areas such as car parking and recreational facilities.
To qualify for these legitimate tax deductions, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.
The ATO is now taking a more aggressive approach to tax deductions made by residential investors and has asked a large number to provide more details about their claims relating to property investments.
Property investors should therefore check that the company undertaking their tax depreciation schedule is a member of the The Australian Institute of Quantity Surveyors (AIQS).
Employing a company who is a member of AIQS such as DEPPRO gives protection to consumers that their tax depreciation report complies is completed in a professional manner.
