Yes, the market is entering a quiet phase over the Christmas break, which means it's a perfect time to seize your next investment opportunity.
While most people in the weeks leading up to Christmas are busy buying Christmas presents, a growing band of astute investors throughout Australia are buying properties.
Investing in property is everything to do with timing as much as location, and the coming holiday period represents a great time to buy an investment property wherever you live in Australia.
A window of opportunity currently presents itself for smart property buyers in the weeks prior to and after Christmas.
Traditionally, sales activity in the housing market slows during this period because people become distracted with Christmas shopping and planning their holiday vacation.
However, after the holiday period the property market rebounds strongly during January and February when buyers flood the market again.
With fewer buyers in the market and a large number of homes to choose from in capital cities such as Perth, Brisbane and Darwin, the lead-up to Christmas is now an excellent time to make a decision to buy an investment property.
DEPPRO figures shows that the lead-up to this Christmas has been a busy time for a number of our offices preparing depreciation schedules for investors who realise now is a great time to buy an investment property.
For example, our Perth office has been exceptionally busy this year during December, with investors picking up bargains due to the recent downward correction in Perth property prices over the past year.
This is particularly the case with our long-standing clients who own several investment properties and study the market carefully to determine the best time to purchase a property.
These seasoned investors find some sellers more receptive to offers on their properties during this period, especially if the property is on the market for a long time and the seller is anxious to sell.
In the run-up to Christmas we are finding that investors are targeting apartments in strong numbers because developers are offering greater incentives in some capital cities due to oversupply issues.
Rental returns for apartments in a number of capital cities are also higher in some areas of Australia, which is also encouraging this trend.
These higher returns for apartments and units are a major reason over 40 per cent of the tax depreciation reports undertaken by DEPPRO are property investors buying these higher-density homes compared to traditional houses.
While there are many issues concerning the depreciation entitlements on properties, in most cases strata-style homes such as new apartments provide a higher rate of depreciation than houses - all being equal.
Some DEPPRO clients who are achieving tax benefits obtained through depreciation can be equivalent to 60 per cent of the total purchase price of the property. In some cases these tax benefits can total $300,000 based on a purchase price of $500,000.
A key part of ensuring the investor obtains their full tax benefits is to have a depreciation professional prepare a comprehensive depreciation schedule of the property.
Even an older-style apartment can qualify for substantial tax depreciation benefits if a depreciation schedule is undertaken.
Paul Bennion
Paul Bennion is the managing director of DEPPRO tax depreciation specialists.
DEPPRO Pty Ltd is Australia’s leading property depreciation company, specialising solely in the preparation of tax depreciation reports for residential, commercial, industrial and leisure investment properties.
