2020 - The year of the property investor!

For a number of years the level of activity by property investors throughout Australia has been in retreat due to a number of varied factors.

However, 2020 is shaping up to be a major rebound year for the property investor sector fuelled by low interest rates and greater competition amongst financial institutions targeting the property investors.

Critically, it is also much easier for investors to now secure lending following a softening of lending strictions by APRA.

Overall, lending to property investors during 2020 is set to surge on the back of easier access to finance combined with greater confidence in the property market which has seen property values rise in most capital cities during the latter part of 2019.

In particular, DEPPRO expects investor activity to surge in largely undervalued capital city markets during 2020 including Brisbane and Perth.

We also expect strong demand for properties by investors in the boom capital cites of Sydney and Melbourne during the coming year.

For property investors wanting to exploit the growing opportunities in the property market during 2020, it is critical they focus on their cashflow.

Enhancing their cash flow position, means that investors can move quickly to purchase properties in areas that primed for strong capital growth during the coming year.

Taking advantage of the "hidden tax benefits" of buying property investment is a key way investors can boost their cash flow during 2020 and quickly built a portfolio of properties.

It is estimated that each year hundreds of millions of dollars in legitimate tax benefits are never claimed by property investors throughout Australia.

This occurs because many property investors do not use the service of a qualified tax depreciation specialist to identify items throughout their property that can be claimed for tax depreciation purposes.

These 'hidden' tax benefits can amount to thousands of dollars in additional tax benefits for individual investors each year if they are correctly identified.

The reality is that many Australian property investors are unaware that a tax depreciation report undertaken by a professional tax depreciation company can identify hundreds of items in an investment property for which you can claim legitimate depreciation benefits.

With rental yields subdued in most capital cities throughout Australia, owners of investment properties can significantly boost their cash flow by claiming these tax deductions on a large number of various household items through depreciation benefits.

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.

The tax benefits associated with negative gearing 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.

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.

Estimates of tax depreciation benefits for an investment property made from an office desk will not be accepted by the ATO.

Depreciation is a complex area of taxation that requires a professional company to undertake a depreciation report because of constant changes in rules.

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 investment.

Property investors should 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.

By Paul Bennion, Managing Director, DEPPRO