It seems that the Australian Property Market has many reasons for investors to look towards Australian shores.
Stable economy, steady interest rates, low entry price and global value for money all encourage people to look at Australian Property as a true investment option.
Surprisingly, another major influence is the Australian Taxation System.
According to Steve Douglas of Australasian Taxation Services Pty Ltd, most foreign investors should be able to have a tax free investment if they use sensible and legitimate tax planning techniques.
These normally focus around the benefit of using bank loans to assist in the acquisition of the property, and an array of favourable tax incentives offered by the Australian Government.
Interest expense on borrowed money used to purchase income producing property is allowed as a full deduction each year against any rental income. This can reduce or eliminate any potential income tax that may have been payable had the property been acquired for cash consideration.
Due to its preferential status by lenders, it is surprisingly easy to arrange a loan to support your purchase of up to 80% of the purchase price, for terms up to 30 years regardless of the age of the borrower.
Under Australian Taxation Laws, every expense incurred as a landlord can also offset any Income Tax, or in some cases the future Capital Gains Tax. This also includes travel expenses associated with the inspection of your property.
In addition, The Australian Government allows substantial depreciation allowances on the construction cost of the property and the internal fittings.
When combining the interest, ownership costs and tax incentives, it is normal for no Income Tax to be due and a surplus of tax credits available to carry forward indefinitely and offset future income or capital gains.
Once a property has been owned by an individual for more than 12 months, only half of any Capital Gains are subject to tax. As this can then be reduced by any tax credits from previous years it is very easy for foreign based investors using prudent debt levels, to ensure that no Capital Gains Tax will arise on the eventual sale of the property.
As such many investors can look forward to a tax free investment in their Australian Property.
Mr Douglas stresses the need to assess your particular circumstances, plan sensibly and ensure you can keep within prudent debt levels, in order to achieve the best results.
“The important aspect is to choose your property carefully so you can maximise your return whilst enjoying the many tax benefits available to you.” Mr Douglas states. “For full clarification, we have a unique financial model and is available free on line on our website at aussieproperty.com called the “Property Tax Estimator” which fully details all the taxation, finance and investment implications of Australian property ownership.