New Property Vs Old Property

Why do we only recommend a new property? There are several compelling reasons why investing in a new property is the best option for our busy investor clients. A new property is one that has not been previously sold, not even for one day. The key reasons for investing in a new property are: 

TAX DEPRECIATION

In 2017 the Australian Tax Office changed its legislation to reduce the tax-deductibility of investment property. Depreciation on your investment is a significant reason to invest. It is for wear and tear on the property including the structure and fixtures and fittings. Since this change, Australian investors can now only take full advantage of the depreciability of the entire property, if it’s new. On second-hand property, even if only owned for a single day prior, the depreciation on fixtures and fittings is no longer deductible. This has a significant impact on an investor’s after-tax cash flow.

MAINTENANCE RISK

On a new property, there are no surprises. It is possible to conduct extensive due diligence on the builder and materials that are used to build your house, townhouse, or apartment. There are also warranties that come with the structure of the build and all the appliances used within. Without this certainty, it’s difficult to assess whether a second-hand property is of good quality or not. You think you can rely on a building inspection report? Think again. These inspectors often don’t move furniture, wall hangings, or lift carpets and rugs to inspect the property. Some are reluctant to adequately inspect the roof space or crawl space under the house and unfortunately, being at the coal face of property and hearing many client stories, we’ve heard the worst.