Property Investing-

Putting more dollars in your pocket

Investment portfolios are generally constructed to meet your income needs, capital growth requirements and risk profile. When selecting the mix of investments to blend into the portfolio, it is important that tax is taken into consideration. It’s not unusual to compare investment opportunities, based on historical or expected future performance (among other considerations). However, this high level assessment doesn’t necessarily tell you what dollars you could expect to receive in your pocket once tax has been taken into account.

Investing in direct property trusts may have the benefit of tax deferred amounts attributable to their distributions. This means that the tax deferred portion (which can be up to 100%) of distributions you receive from your direct property trust investment is not taxable in the year you receive it, unlike many other investments. Tax deferrals from property distributions result from building allowances and depreciation allowances. The amount of the tax deferral reduces the cost base of an investors’ Units in the Fund and therefore increases the amount of the capital gain on disposal of that investment. But if the relevant asset is held for more than 12 months an investor may be entitled to a discount on the capital gain (50% for an individual or trust and 33 1/3% for superannuation funds).

Therefore tax deferral has two clear benefits: first it provides greater cash flow during the investment term, because you keep more of the income in your pocket. Second at the end of the investment term, provided the investment is held for longer than 12 months, the discounted capital gains rules may result in less tax being payable at that time.

There are many types of direct property trusts available, including those with single property investments only where the investment returns are reliant on that particular property in that particular location providing the income and growth returns for investors. There are also diversified property trusts that provide a spread of commercial property investments, including:

n         industrial

n         office

n         retail

These diversified property trusts also tend to have the benefit of geographic diversification throughout Australia. This means that there is no single property risk or reliance, but rather the income and growth returns of the investment will be as a result of the performance of each of the property types in each of the different locations.

Further contributing to the advantages of diversified property trusts can be the experience of the investment manager in unlocking the growth potential and increasing the rental income of those properties. One such investment manager is Abacus Property Group an experienced specialist property funds manager, that currently manages gross assets of approximately $1.4b and offers a number of property funds, including a diversified property trust with capital and income protection. (Investments may only be made in these trusts using the application forms in the offer documents.)

There are many benefits to investing in direct property trusts and, when assessing these opportunities, some of the things you should consider are:

n         the nature and diversification of the property assets of the trust

n         the experience and track record of the Manager

n         the features and benefits the trust provides, including income and/or
capital protection

n         the fees and charges of the trust

Information Supplied by:

Abacus Property Group

Phone: +61 1800 253 860

Email: enquiries@abacusproperty.com.au

Website: www.abacusproperty.com.au