Alrighty, I’m heading to the capital for this one.

This is a nice property at 56 Longerenong Street in Farrer ACT, with two self contained units; a two storey setup receiving two different weekly rental payments. We’ve covered this sort of thing before, so we know that two streams of income is a great starting point.

We’ve been given amounts for rates and land tax of $1,282 and $2,268 respectively, and I’ll put in the usual rental expenses that we’ve come to know are all too common, and often predictable. With a combined (quoted) rent of $670 per week, we’re improving our situation bit by bit.

Now, you might have noticed this property is being sold at auction. So, for the sake of this analysis, I’ve estimated a purchase price of $560,000 plus purchase costs. The agent has confirmed this as realistic, and I wouldn’t want to go too far over this amount or else the end result may not be as pretty.

Working with all these figures, we can now see that dual income properties don’t always stack up so well! Here, the investor is in fact losing about $53 per week in that first year! Ouch!

Stress less, though. There’s one more benefit to be taken advantage of.

Stamp duty is slightly different in ACT, in that the full amount is claimable as a tax deduction in the first year of the investment, rather than it being treated as a capital expense at the time of sale. ACT property is sold on leasehold, not freehold, and this makes all the difference. It’s also where Parliament sits, but make of that what you will…

So now this means that in the first year, we’re switching that $53 weekly loss over to an annualised cashflow profit of $5,500. Much better! However, the second year will still be at a slight loss as the stamp duty benefit is a once-off deduction.

Obviously, a lower purchase price would also push that figure further into being positively geared.

Not a bad position to be in, and this just confirms that it’s always good to know the different tax laws and benefits applicable to each state. An investor wanting to excel in the property market must have a strong understanding of these laws, or at least, have a smart accountant who can help you out 😉