Tax, timing and property: how to spot an opportunity

As we begin the new financial year, tax deductions are top of mind for many people, particularly property investors.

“The new financial year signals tax time – with many Australians working hard with their accountants to ensure they are not missing out on any of their claimable tax deductions. It’s also a time when many people start planning for the next financial year, to work towards maximising their tax benefits for the upcoming year,” says LJR Accounting Principal Accountant, Jane Zhang.

“As there have been significant tax changes for property investors announced in the latest Federal Budget, such as new tax depreciation changes which increase the appeal of new property over second-hand property, it’s important for investors to take the time to talk to their accountants in order to be fully informed of all relevant changes,” she said.

Tax changes favour new over second-hand property

Tax depreciation specialists, BMT, point out that purchasers of second-hand properties will be disadvantaged compared to investors of new properties following the latest Budget announcement – which proposes tighter restrictions on depreciation claims relating to plant and equipment deductions in investment properties.

“It is expected that investors will be able to depreciate the plant and equipment assets within a brand-new property as they have been previously which is a clear advantage over second-hand property,” said BMT Tax Depreciation Chief Executive Officer, Bradley Beer.

Depreciation scenario – purchasing before and after 9th May 2017. Source: BMT Tax Depreciation

As the example above from BMT demonstrates, the difference between the depreciation claimable for second-hand versus new properties is substantial; representing potentially thousands of dollars-worth of depreciation entitlements each year, particularly in the first five years,” said Ironfish National Apartments Manager, William Mitchell.

In addition to the tax benefits, there are, of course, other advantages to buying new properties, such as potential stamp duty concessions and government grants for new properties, greater ease in holding the property and buying at today’s price with delayed settlement.

So, what kinds of “new” property can you invest in?


New apartment developments often take advantage of a location which is near key transport nodes for quick accessibility to employment, and are co-located with lifestyle hubs and dining destinations. These are usually within 15km of a main CBD, or in close proximity to satellite CBDs.

New apartments are customised to reflect contemporary tastes and preferences such as open plan living areas, designer appliances, efficient floor plans, luxury finishes and high-quality amenities such as a pool, gym, outdoor recreational area, tennis court and even private dining areas for residents.

According to BMT, apartments can offer the greatest tax depreciation benefits also.

“Investors often think they can claim more deductions for a house due to its larger floor space. However, usually the extensive amount of infrastructure involved in the construction of a residential unit can result in a higher construction cost, increasing the overall depreciation claim for these properties,” reports BMT Tax Depreciation CEO, Bradley Beer.


Source: BMT


Buying house and land close to the CBD is often unaffordable, so investors often need to look further afield from an affordability perspective – up to 50km from a major CBD.

A new house and land package also has the benefit of being designed to accommodate contemporary tastes and lifestyles. A new house, compared to a second-hand house is also more likely to be built to a higher energy efficient standard and carry fewer maintenance issues than an established home.


Townhouses provide investors an affordable opportunity to invest closer to CBDs whilst still having a land component in their investment. The best townhouse developments are architecturally designed, located within established communities and close to schools and shops. In terms of outlay, they can offer a lower entry point into a desirable suburb than a detached house.  Yet they offer similar amenity to a house in terms of layout and access to some outdoor space, so they are desirable to families, downsizing retirees, and other tenants who are attracted to the “lock up and leave” lifestyle.


Many investors like the idea of buying new properties but don’t want to wait for a long off-the-plan period before a property settles. They are aware of the potential risks in “waiting for the best time to buy” as that can lead to never making a decision and never actually investing. Some people need the reassurance provided by being able to see the completed property first. The challenge is that 95% of the time, the best properties and the best projects are usually sold out and not available by the time they’re complete. However, these types of opportunities can be presented on rare occasions to astute investors.

“At Ironfish, we’re proud of the quality of properties we offer to our investors – we know these are properties which our investors are going to be proud to hold over the long term and perhaps even pass down to their kids or grandkids. Ironfish works with many of the best developers from around Australia; many of these developers have projects finishing all the time and do have limited opportunities available in these soon-to-be completed projects, These represent amazing opportunities to buy into highly sought after projects and give buyers confidence around the project’s delivery, as well as current interest rate and rental environments,” said Ironfish National Property Director, Grant Ryan.

Ultimately, whether you choose to invest in a new house, town-house or apartment off-the-plan or at near-completion, as a general property investment guide, the key is to identify a quality property that is well-located, with easy access to the CBD, transport and major infrastructure as well as community and lifestyle amenities, and is a property which is being delivered by a leading developer with a legacy of excellent residential property development.

If you’re interested in further information about any limited close-to-release opportunities or a property investment guide, please contact your local strategist.

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