Is it possible to reduce your tax payments when Investing in Property?

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Like it or not taxes are a part of the property landscape. It doesn’t matter if you are an investor or a home buyer, we get slugged.

The biggest whack of the stick is a tax called stamp duty. The state governments issue this tax, therefore the amount and the way it’s implemented vary from state to state. Here in SA, the Stamp Duty is the highest in the country. Added to that it isn’t tax deductible up front, it can only be added to the cost base when you sell an asset (for investment purposes).

A possible way to reduce stamp duty is to construct or buy off the plan. This allows for stamp duty to be calculated on the land component only and doesn’t not calculate on the final value.

This can save you as a purchaser tens of thousands on the initial investment. Sometimes State Governments provide incentives for apartments close to the city, to reduce urban sprawl. If you are interested in apartment investments, this could save you tax monies in reduced stamp duty also.

When it comes to investing in property there are many tricks, traps and strategies to maximise your tax benefits and reduce your tax payments, the above scenario’s illustrate to carefully consider your decision and the consequence before you act, I always recommend speak to your Accountant for tax advice.

Nieuvision offers Property Strategy planning and tax advice in a packaged service. Download our free Investment Property Finance Guide

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