Contact: Vessa Playfair
Deloitte
Director of Communications
+61 (0) 419 267 676

Contact: Joe Galea
Deloitte
Partner
+61 (0) 2 9322 7591

The 2006/07 Federal Budget has provided a boost to the large number of mum and dad investors in the listed and unlisted property trust sector said Deloitte tax partner, Joe Galea.

“The increase in the diminishing value rate for depreciation deductions by one-third will substantially increase the after-tax yields that property trust investors will receive in the future.

“This is because the amount of tax deferred distributions (that is, distributions that investors don’t have to pay tax on until they sell their investment) will increase as a result of all the extra tax depreciation deductions” said Mr Galea.

“However, investors could gain a second time when they come to sell their investments as the amount of future capital gains, including amounts that relate to tax deferred distributions, are likely to qualify for existing discount capital gains tax concessions.  This means that for mum and dad investors, with the reduction in personal tax rates, that capital gains tax rate on their capital gain will now only be 22.5% or less.

“Its good news for property fund managers and syndicators,” said Joe, “as we are likely to see more demand for their existing and proposed property funds as investors realise the tax benefits of investing in property trusts.”