Queensland Economic Outlook ‘Positive’: Deloitte

Queensland’s economy is solid and giving people good reason to be upbeat about the future, according to Deloitte’s latest economic snapshot of the financial quarter.

Construction and development appeared healthy to Deloitte’s analysts, who attributed some of Queensland’s strong economic outlook to high levels of interstate migration and international tourism, which have encouraged a growing list of tourism-related construction projects.

Queensland’s international tourist arrivals are expected to remain solid over the forecast period, averaging growth of 4.7 per cent out to 2021.

There were reasonable gains in engineering activity in Queensland, and Cross River Rail was in the planning stages.

The report also put a focus on liveability and housing affordability. In the midst of the continuing debate over house prices and quality of living, Deloitte reported that Queensland has less cause for concern.

Queensland’s place in the national picture of housing affordability is a comparative advantage. In the midst of a housing price boom, living in Queensland remains more affordable than in the southern states.

While Sydney and Melbourne house prices have experienced year-on year growth in the double digits, Brisbane has experienced a modest 3.5 per cent growth.”

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Originally posted on ‘The Urban Developer

Smart Property Investors are Strategic Investors

Successful property investors seek out the right people with the right knowledge and a good track record of successful investing themselves. When working with investment specialists you will hear them recounting key learnings that have guided them through the ups and downs of their investment journey – the real ‘Monopoly board’. Here are five simple key learnings that we’ve learnt along the way, investing ourselves and working with our clients.

Are you buying with your heart or your head?

It’s essential that you treat investments for what they are – assets that are there to help you achieve your financial goals. Being rigorous during your due diligence and calculating projected returns on every potential investment, is the only way to minimise risk and maximise return. If you can’t learn to control your own emotional monsters (greed and fear), you’re unlikely to achieve those financial goals.

Paralysis by Analysis – Are you stuck on the mouse wheel? 

Investors all too often get caught in this cycle, trying to find the perfect property that ‘ticks all the boxes’. Although it’s imperative to do your research and due diligence, eventually you need to do something: unfortunately, you won’t achieve your financial goals by simply thinking about them. We often see this play out: by the time the decision has been made, the opportunity has passed. You’ll never make a profit on a deal you never did. This is why it’s so important to engage your team of trusted and independent advisors – your accountant, lawyer, financier and property investment specialist. They’ll provide you with necessary independent advice that will give you the confidence required to move forward and execute your strategy.

Is it getting too easy?

All investors can be guilty of this. Once you get comfortable with investing, it’s easy to fall into the complacency trap. You forget about the impact of interest rates, forget to review your portfolio regularly and fail to act swiftly in changing markets. Retain the qualities of beginner investors: passionate, keen, hungry and involved!

Are you building strategic habits? 

Like diets or exercise, successful investing really comes down to self-discipline, focus and consistent action. Most of us know what to do, but we don’t follow through and do it. Regular habits will lead to the results you want.

Smart Investors are strategic investors. 

Property investment is like running a business, you don’t invest in what you like, you invest in what works. Investing in property is a good way to grow your assets, there is no doubt about that. However, as with other types of investments, it’s essential that you build a team of specialists, listen to their advice, then create a strategy and see it through. The times we see people come unstuck when investing in property is due to not following the above principals, it’s not complicated, but it does take patience.
Recently there has been much focus on the Australian property market in the media. It’s a constantly changing landscape. That being the case, there are still significant opportunities out there for the educated and strategic investor.

The team at Triple Zero would love to sit down with you to review your property strategy and assist you to continue to move toward your financial goals. If you’d like to chat, click here to get in touch.

Treasury Laws Amendment Bill to impact investors

Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 was introduced into parliament on the 7th of September 2017 and included legislation changes which will negatively affect residential property investors across Australia.

Announced in the 2017 Federal Budget, the amendment denies tax deductions for the decline in value of ‘previously used’ or ‘second hand depreciating assets’ (plant and equipment) found within residential investment properties.

The new legislation will limit plant and equipment depreciation deductions to only those outlays actually incurred by investors in residential properties and those who purchase brand new investment properties.

“This change will have a major impact on investors, essentially reducing the annual deductions they can claim which in turn, reduces their cash return each year,” said Chief Executive Officer of BMT Tax Depreciation, Bradley Beer.

“This could lead to investors being in a tighter financial position and may discourage investors from purchasing second hand residential properties in the future.

“These amendments will cause a financial disadvantage for property investors. The vast majority of whom are typical mum and dads, police, nurses and teachers who own one investment property. We will be treating them differently to investors in other asset classes.

“A transaction of a property between two parties will now extinguish the ability to claim legitimate deductions,” Mr Beer explained.

From July 1 this year, the depreciation of acquired second hand or previously used plant and equipment assets will be reflected in the cost base for capital gains tax purposes.

Existing investments will be grandfathered. Property owners who exchanged contracts to purchase their property before the 9th of May 2017 can continue to claim a deduction for depreciation on the plant and equipment items within the property until either the investor no longer owns the asset, or the asset reaches the end of its effective life.

The Draft Bill went to public consultation in August which saw the public and key stakeholders voice concerns about the severity of the changes and the negative effect on housing affordability.

There were also proposals outlining alternative options (put forward by industry stakeholders) which were designed to satisfy the integrity issue of claims being made in excess of an assets value without extinguishing a legitimate deduction for property investors.

Notwithstanding the consultation process and suggestions from the public, industry and key stakeholders, the government continued with the proposed amendments outlined in the Draft Bill.

“There are much simpler and fairer ways to address the integrity issue raised and BMT has put these options forward to Treasury,” said Mr Beer.

Legislation now needs to be debated and passed by both houses of parliament before it becomes law.

“We can only hope that the senate opposes this policy,” said Mr Beer.

“Our data demonstrates that the average depreciation deduction claimed for plant and equipment assets on a typical three year old residential property, purchased for $600,000, is $21,178 for the first five years.

“The changes will result in an average loss of $4,236 in deductions per year to property investors. Based on a marginal tax rate of 37 per cent, an increase of $47 per week in rental income would be required to counter balance this reduction.

“The good news is that investors who purchase brand new properties or new plant and equipment assets for a residential investment property can continue to claim a depreciation deduction over the effective life of the asset. However, subsequent owners of a property will be unable to claim the deduction for depreciation of plant and equipment assets,” said Mr Beer.

The capital works deduction, which makes up 85 to 90 per cent of the total depreciation claim for residential investors will not be affected.

“Residential property investors will still be able to claim capital works deductions, also known as building write-off, including any additional capital works carried out by a previous owner,” said Mr Beer.

“These changes make it as important as ever for property investors to utilise Quantity Surveyors to find and correctly claim, every single deduction they are entitled to,” said Mr Beer.

Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICSM, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.