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New real estate 'could be more ...

New real estate 'could be more cost-effective'

Those who invest in newer real estate rather than older properties could save thousands of dollars a year, it has been suggested.

The savings will come from benefits such as tax deductions, according to Nieuvisio – a high profile investment and accounting firm. 

One of the primary benefits could come from negative gearing, a process of investing borrowed money so that it makes a loss which can be claimed as a tax reduction. These tax deductions are greater for newer assets. These properties also tend to have significantly lower maintenance costs compared to older property. 

However, buyers are advised that they should look carefully at the numbers before they make any purchases. 

Mel Nieuwenhoven of Mieuvisio said: "Investing in an older-style home on a large block with a big backyard may be appealing, but can come with higher stamp duty, fewer depreciation benefits and significant ongoing maintenance costs."

He also urged investors not get emotionally involved in their purchases and to think logically about where they decide to put their money. 

However, the news does come with a few stark warnings. Some newer properties are not built to the same high-standards as older ones and therefore these could fall in value very quickly. They will also be subject to more maintenance. 

Another problem can be the over-production of apartments in big cities. If investors keep building apartments that are unaffordable to many people, this will lead to a fall in prices as they become surplus to requirements. 

People are also advised not to buy brand-new or off the plan apartments. New properties often have teething problems which can be expensive, warned Mr Nieuwenhoven. Off the plan can also take longer to build than expected and you can lose money while you're waiting on completion, buyers have been advised.

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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