Wealth Buy Property on October Tax Changes

Well the Government did make some changes during the budget for us investors. These changes were nowhere near as bad as many so call experts were predicting. As I said in May’s Wealth Buy Property Newsletter, “not all is doom and gloom”.

Sure we cannot claim as much on depreciation as before, but from October this year the tax changes will put more cash in our pay, which offsets most of the loss. Also when the property is sold there will be less depreciation to pay back. These changes are probably a correct and sound move by the Government. Most residential houses that are maintained to a good standard do not depreciate and in fact usually appreciate over time.

Inflation is now well contained within the Reserve Banks targets. Unemployment dropped from % to 6% from Dec’09 to March 2010. This is the largest fall o record. Wage growth only rose 1.3% March 09 to March 2010. Taking these factors into consideration the Reserve Bank should be in no rush to raise interest rates in the near future.

When is a good time to buy property? This is a question I get asked often. My standard answer is now. Reason for this answer is the longer you own the property the more chance you have to get capital growth. Also the cost to build a new house only goes up, Council requirements get more stringent every year adding also to the cost.

The GST changes put an additional 2.5% on the cost of a new house. Land is a non renewable resource, therefore the more land that gets use, puts the price/value of remaining land up, and the list goes on.

Everybody needs a warm/dry place to live. Why would anyone pay almost the same rent for a colder/damp property? The answer is simple, they don’t. With our new properties, the demand is very high. When demand is high, prices tend to rise faster than when demand is low. This has a twofold effect: – Firstly our rental rates are at the top end of the scale and secondly re-sales are easier to realise.

Reading an article on Donald Trump recently he answered the same question “I entered into New York real estate when it was supposedly a terrible market, but I became successful. If I’d listened to all the negativity I wouldn’t be where I am today” I think this sums up perfectly that we should all trust ourselves and if we believe in something, to follow our beliefs.

I sincerely hope Wealth Buy Property can help (in some small way) you to achieve your dreams.