Buy new or olf IP

[WebBoard]

From: Lars Andersson


Hi all,

I am new to this forum to apologies if this turns out to be "that old question again".

I am looking at buying my second IP. The first one was a brand new unit as all people I spoke to said "you have to buy a new property to get tax advantages". Is this true, or is it as advantageous to buy an older property an perhaps renovate if it is needed? Should I even bother about tax benefits and concentrate on growth and how easy it would be to rent it out?

Regards,
Lars

 

[Tibor]

Reply: 1
From: Tibor Bode


Lars,

You have to decide what strategy suits best to you. If you hate / disinterested / can't be bothered with reno's than obviously let someone else do it or buy new. The only issue when you buy new the profit usually will go to someone else and the property most likely will be negatively geared (even with depreciation). You need to discuss your tax benefit issue with your accountant (preferably an active R/E investor). There is no right or wrong solution, just differing ones and you need to figure out which is the best for you. I can give you mine, but I am not sure it really helps you.
Only issue I'd watch out in the current environment when a negatively geared property stacks up using the expected future (calculated) cap gains. That is gambling. Cap gains if, when and how much no one knows
just will guess and I would not base something purely on it. You will always be able to hold onto a cash flow neutral or positive property, no matter what happens.

Tibor

 

[Waverlybay]

Reply: 1.1
From: Waverly Bay


Hi Lars

I am sure the tax benefits from your new apartment would have been great... but just out of interest, what sort of capital gains have u seen on the apartment?

Cheers

Waverly

 

[WebBoard]

Reply: 1.1.1
From: Lars Andersson


Without any proper valuation (just an estimate by the property manager and agent who sold me the unit) the capital gain would be about 18-20 percent. This is in Chippendale, an inner city suburb of Sydney.