Property investors are expected to receive an additional 33% in annual deductions from the ninth Federal Budget, according to leading property tax specialist Napier & Blakely.
According to Napier & Blakely, the May 9th Federal Budget provided property investors with a major increase in property tax allowance.
Napier & Blakely, which sits on the Australian Tax Office Committee and acts as an advisor to the Property Council of Australia and other high profile Australian property bodies, said the budget changes will have a positive effect on the commercial property market.
In addition, the property tax specialist said the budget mitigates any concerns that reductions in marginal tax rates might dampen the residential property market.
The budget announced that for eligible assets acquired on or after May 10, 2006, the diminishing value rate for depreciation will be increased to 200% of the straight line rate compared to the current DV of 150%.
According to Napier & Blakely, under the new regime, assets acquired from May 10, 2006 will have a substantially increased after tax return on investment, potentially adding up to 1.5% onto the after tax return and substantially increasing the cash income component.
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