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Dear |
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Commentary
Investors buy properties because there is a belief that real estate is an enduring asset. That over a long period of time, real estate appreciates.
In the shorter term, many things change and are affected by other causes -
- The Commbank lifted interest rates by 0.1% last fortnight . Looking ahead, interest rates will need to increase mainly from the massive government borrowings which need to be raised and serviced by high bond rates, higher taxes and eventually higher interest rates.
- Gross rental yields and capital growth are expected to be subdued to 2011.
- Unemployment is forecast at 8.5% by mid 2011.
- Credit and lending are getting harder.
In the longer term :
- Rentals will increase in line with other rising costs - sending to investors the income to compensate interest costs increase.
- Undersupply of new properties will get worse as developers are currently not building - as the economy recovers, property prices will surge.
- Population continues to increase. Immigration will have more demands on rentals and housing pushing up rents and prices. Immigration will also bring in skills and enterprise creating employment - again putting pressure on rental and housing demand.
- Infrastructure and public works on the plans and committed will be constructed here and abroad which will again drive demand for materials and jobs.
- Like previous recessions, this one will pass. New wealth will be created in Australia and overseas - Properties, especially at prime positions will be in demand from renters and buyers sending rents and prices north.
"Investors are people who buy things for the long haul with the idea that over a considerable period - many years - their investments will appreciate in value." Curtis M. Faith in his bestseller stock trading book Way of the Turtle.
Tax Time As the tax time closes in on 30 June 2009 check if you may want to optimise your deductions provided by the tax legislations. Apart from all costs and expenses in respect of your investment properties paid for the tax year ending 30 June 2009 , you may consider further prepaying expenses relating to the properties. Please check with your accountant to assess and confirm the suitability or advantage in your specific situation. Usually the more significant property expense is the loan interest. You may wish to check with your bank and your accountant to prepay before 30 June 2009, the loan interest for the next twelve months, and apply this payment as a deduction to reduce your taxable income. Other expenses that may be considered are rates, body corporate fees and insurance. The 12 month rule applies - which states that you can claim an immediate deduction if the payment is incurred for an eligible service period not exceeding 12 months and the eligible service period ends in the next income year. Please check with your accountants for the details.
Also, do not forget depreciation. This is a huge concession , it is a non cash item - no cash was paid out by you - yet the legislation allows you to apply depreciation to reduce you taxable income. If you own an investment property and have not been claiming depreciation, you could be missing out on thousands of dollars in deductions. We have a special arrangement with BMT Quantity Surveyors for a special fee of $330 ( include GST) for our clients and friends ( otherwise BMT's usual fee is $715) , to provide a tax compliant depreciation report . The fee for the completion of the report is 100% tax deductible. Please click here for a short article from BMT and to contact them for your special rate. To estimate your depreciation potential, please check the calculator by clicking here.
 The iconic statue was created from the aptly named Carrara marble from the same quarry that the original David statue was made from. The original David stands in Florence, and now its well known replica will be at home in the Gold Coast's own European inspired community for all to see.
Buy into an iconic master piece.
Harry Triguboff , Australia third richest man , ( his entities) will own 10 floors. Invest with him.
Contact us to invest on the super high floors - a rarefied space for the few ... be there .. !
Sincerely - Your team at Astute.
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