Investment property is one of the most trending topics in today’s day and age. People hear success stories, see rising prices, and start wondering if property could be their path to financial freedom. It’s often talked about as a safe and reliable way to build long-term wealth. However, despite all the interest, many people only have understanding of how property investing works.
For many, money is the only motivation for entering this area. The idea of passive income, capital growth, and owning assets is exciting, and it’s easy to get caught up in that excitement. However, on numerous occasions, people jump in without understanding the basics. The risks and structure behind a good investment are often neglected. Property investing isn’t just about buying a house and waiting for it to grow in value.
To break this down, we sat down with our expert accountants to get clarity from professionals who deals with property investors every day. Over here, we explain the fundamentals of investment property in a clear way. He also spoke about the tax deductions that property investors can legally claim.
We have also highlighted the importance of depreciation and how many investors either misunderstand it or overlook it. Depreciation can be a powerful tool in improving cash flow. He shed light on some of the most common mistakes people make when investing in property. From poor planning to incorrect assumptions, his insights offer valuable lessons.
Below is a complete breakdown of “Investment Property”
1) What is an “investment property,” and why do Australians invest in them?
An investment property is any property that’s used to produce income or long-term capital growth.
This could be a property you buy as an investment, or it could be a former home.
Australians are drawn to property investing because of its solid nature and long-term-track record of growth.
It allows you to use leverage through borrowing, and there are tax benefits available, like deductions for interest, running costs and depreciation.
When organized correctly, property can be a long-term wealth-building strategy, whether it started as your home or an investment from day one.
2) What tax deductions can property investors claim, and which ones do people commonly overlook?
Most investors know about the big deductions, things like loan interest, council rates, insurance, property management fees, and repairs.
But the ones people often overlook are the smaller or less obvious ones.
That can include depreciation, borrowing costs, body corporate fees, bank fees on the loan. Another big one is correctly claiming repairs versus capital improvements, getting that wrong can delay deductions by years. These details can make a significant difference to your after-tax return. For expert advice, please feel free to contact the team at Zimsen Partners anytime.
3) How does depreciation work for investment properties, and why is a depreciation schedule so important?
Depreciation lets you claim a tax deduction for the wear and tear on a property and its assets over time, even though you’re not actually paying cash for it each year. This is why it’s often called a “non-cash” deduction.
There are two main types: the building itself, and the plant and equipment inside it, like appliances.
A depreciation schedule, prepared by a qualified quantity surveyor, breaks this all down properly and ensures you’re claiming everything you’re entitled to.
Without one, many investors either under-claim or miss out completely sometimes thousands of dollars over the life of the property.
4) How should investors choose the right ownership structure for their investment property?
There’s no one-size-fits-all answer here.
Buying in your personal name, a company, a trust, or an SMSF all have very different tax, cash flow, and asset protection outcomes.
The right structure depends on things like your income level, whether you’re buying for growth or cash flow, your long-term plans, and even estate planning.
The biggest mistake we see is people choosing a structure based on what a friend did, or what sounded good online, without advice.
Once a property is bought, the structure is very hard and expensive to change. For expert advice please feel free to contact the team at Zimsen Partners.
5) What are the most common mistakes you see property investors make?
The biggest one is not getting advice early, especially before buying or selling.
We often see investors miss deductions, choose the wrong ownership structure, or not plan for tax on sale years down the track.
Another common mistake is mixing personal and investment finances, poor record-keeping, or assuming their tax return is “simple.”
Property investing creates opportunities but only if it’s structured and managed properly.
This is where good accounting advice doesn’t just save tax, it can improve the outcome of the investment.
6) Is it better to buy a new property or an existing one for investment purposes?
From tax perspective, new properties often look attractive because they usually come with higher depreciation deductions.
The “better” option depends on your strategy and the opportunity in front of you.
Whether you’re chasing cash flow, growth, or a balance of both. We always encourage investors to look at the full picture: tax, finance, and long-term goals, not just what gives the biggest deduction today.
