Investing in property offers investors a chance to build wealth; nevertheless, it’s crucial to be
cautious because misleading and deceptive information is prevalent, potentially leading
BMT Tax Depreciation explore some common myths and potentially dangerous advice on
property investment including:
– Only wealthy people can invest in property
– Investors should only buy new
– It’s best to limit purchased to familiar locations
– Property investment guarantees quick wealth accumulation
– Don’t worry about claiming depreciation – it only increases your property’s
Myth: Only wealthy people can invest in property
Having cash is helpful when purchasing an investment property but it’s not the be-all and
end-all. Contrary to popular belief, most Australian property investors are ‘mum and dad’
investors: non-professional, small-scale investors. According to data from schedules
completed by BMT Tax Depreciation, most investors own just one investment property.
Purchasing an investment property isn’t exclusive to having accessible cash flow, investors
can use the equity within their home and refinance their mortgage.
Another strategy is rentvesting, rentvesting is a home-owning strategy where you rent a
property to live in that’s right for your lifestyle, while you own an investment property that’s
right for your budget. Rentvesting is increasing in popularity due to its accessibility and
flexibility for first-time buyers.
Myth: Investors should only buy new
The notion that tenants exclusively prefer newly built properties and that older ones do not
qualify for tax deductions is inaccurate. Older properties not only make attractive rental
properties but also yield lucrative tax deductions.
Frequently, older properties come with a more budget-friendly price tag, offer greater
potential for value enhancement, and are more readily accessible for purchase. These
properties may also currently house a long-term reliable tenant which the new owner may
choose to retain.
Myth: It’s best to limit purchases to familiar locations
Investors shouldn’t succumb to the notion that only familiar areas are worth buying in.
Acquiring an investment property requires a distinct approach from buying a family
residence. When evaluating potential locations, it's crucial to factor in elements like
population and infrastructure growth, proximity to public transport and shopping hubs, as
well as rental demand.
After researching these factors, the information found will often help investors decide on the
type of property, tenant and location they’re after.
Myth: Property investment guarantees quick wealth accumulation
Investing in property has the potential to build wealth and create a strong long-term financial
plan, however, it’s not guaranteed. No investment scenario is a guaranteed way to get rich,
regardless of the ‘foolproof’ or ‘never failing’ method often promised to investors.
Investing in property is typically a long-term strategy that involves experiencing and
preparing for the ups and downs of the property cycle.
Investors must be mindful of their risk tolerance; consulting an accountant or financial
adviser is the safest way to maintain these boundaries.
Myth: Don’t worry about claiming depreciation; it only raises your property's cost
Since property investment is a long-term strategy, investors should experience the benefits
throughout the journey, rather than solely relying on them at the time of sale.
Claiming depreciation deductions can reduce a property’s cost base, however, claiming
depreciation each year will improve both the investor’s annual cash flow and overall tax
outcome. It’s also worth mentioning that a capital gain is never guaranteed, so, it’s best to
claim the deductions along the way as a reliable way to optimise cash flow.
BMT Tax Depreciation helps investors reduce their taxable income by thousands each year
by identifying every available depreciation tax deduction within an investment property.
To learn more on how claiming depreciation deductions in an investment property can
greatly improve cash flow, call BMT on 1300 728 726 or Request a Quote.
This is general advice only. When researching or acquiring advice it’s important to ensure sources and
professionals are appropriately accredited, failing to do so can result in dangerous and financially unstable
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service.