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Newer real estate ‘a better option’ for investors

Investors who purchadse newer real estate rather than older properties could save thousands of dollars a year, but should should look carefully at the numbers before they make any purchases.

The savings will come from benefits such as tax deductions, according to accounting firm Nieuvisio. 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.

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.:

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

However, 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.

Off-plan new properties often have teething problems which can be expensive, warned Nieuwenhoven. Off-plan construction can also take longer to build than expected and you can lose money while you're waiting on completion, buyers have been warned.  

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