A Message to Victorian Property Investors

With ongoing discussion around potential tax changes, land tax increases, and government policy shifts, many investors are asking whether they should change their buying strategy.

Our view remains the same: tax should never be the primary reason for selecting an investment property.

While tax benefits can improve cash flow and create short-term advantages, they don’t necessarily make a poor asset a good investment. Over the long term, the biggest drivers of investment performance remain:

 Capital growth
 Rental yield
 Quality of the underlying asset
 Scarcity and owner-occupier appeal

Too often we see investors chasing depreciation schedules, stamp duty concessions, or tax incentives, only to end up with a property that underperforms the broader market.

Why We’re Cautious About Buying Brand New

Many investors are attracted to new properties because of the tax benefits and depreciation available. While these incentives can be appealing, they should be viewed as a bonus rather than the reason for purchase.

The reality is that many brand-new properties come with risks, including:

• Paying a premium above underlying market value.

• Higher levels of competing stock in the future.

• Limited land content.

• Greater exposure to construction quality issues.

• Slower capital growth compared to established properties in tightly held locations.

A depreciation benefit can save thousands in tax, but it won’t compensate for hundreds of thousands of dollars in missed capital growth if the asset underperforms over the next decade.

How We’re Advising Investors Today

Regardless of government policy or tax changes, our focus remains on identifying quality assets that stack up on fundamentals.

That means targeting properties with:

• Strong owner-occupier demand.

• Scarcity value.

• Proven long-term growth history.

• Quality land component where appropriate.

• Rental yields that support holding costs.

We understand that every investor’s budget is different, and the right strategy for a $700,000 budget may differ from a $2 million budget. However, the principles remain the same: buy the best quality asset your budget allows rather than chasing the biggest tax deduction.

Tax rules will continue to change. Governments will come and go. Incentives will be introduced and removed.

But quality property in quality locations has consistently rewarded investors over the long term.

As we often tell our clients, you can only claim a tax deduction if you’ve spent the money in the first place. We’d rather focus on helping you make money than finding ways to lose less of it.