Cashflow Analysis of New Vs Established Property Investment
Topics Covered in this presentation are:
With better depreciation deductions and a superior return on new stock, an investor can more easily service their property portfolio.
The construction costs on a new 2 bedroom apartment are just as much if not more than a 3-4 bedroom project home.
You cannot depreciate the land component. With older houses, the majority of the purchase price is represented as land value.
For income earners on the higher marginal tax brackets, holding a portfolio of new residential property will have minimal impact on their after tax cash flow.
For the same after tax cost, you can hold a significantly larger portfolio of new residential apartments compared to older houses.
It is also pertinent to mention LAND TAX. With apartments, the land component is smaller. You can often hold a larger portfolio of apartments before you run into land tax implications. It is also noteworthy that Land Tax is a state based tax, so diversifying between the states over time is also a good strategy.