Key Takeaways
- Vacant land tends to appreciate faster than many other property types because land is scarce and drives long-term value growth
- Unlike buildings, land generally appreciates while structures depreciate over time
- Historically, houses have increased in value significantly more than apartments and units because they include a larger land component
- The main challenge with vacant land is that it does not generate rental income and holding costs are usually not tax deductible
- Ethical IQ has developed a tax structuring strategy using low-tax trusts that can turn vacant land into a cash flow positive investment
Hello there. My name is Rick Leighton from Ethical IQ.
Today, let’s talk about how investing in vacant land can actually be a very smart move.
You’ve probably heard the saying, “They’re not making any more land.” And it’s true. Because land is a scarce resource, it tends to increase in value faster than many other real estate options.
When you invest in property, it’s really the land component that drives long-term value. Land generally appreciates over time, while buildings and structures tend to depreciate.
This is one of the reasons why houses often experience stronger capital growth than apartments or units.
Since 1985, for example, houses have increased in value around 48% more than apartments and units.
So holding assets that include a significant land component can be a very strategic move for property investors.
But if land is so great, why isn’t everyone rushing out to buy it?
Well, there are a few hurdles.
The biggest challenge is that vacant land doesn’t produce cash flow on its own. Without a property on the land generating rent, investors have to cover the holding costs themselves.
And in many cases, those costs aren’t tax deductible, which can make vacant land expensive to hold.
But here’s where things get interesting.
There is a strategy that can potentially turn a vacant land investment into a cash flow positive one — even without rental income.
Imagine owning prime residential land without having to worry about the ongoing holding costs.
Through the clever use of low-tax trust structures, like those advised by Ethical IQ Advisory, investors may be able to generate tax savings that exceed the holding costs of the land.
This means the investment can effectively become cash flow positive from day one, even while the land continues to grow in value.
To learn more, talk to us at Ethical IQ Advisory — Australia’s number one tax advisory firm for property investors.
You can book a complimentary strategy onboarding session by selecting Game-Changing Tax Strategy Number 1: How to Make Vacant Land Cash Flow Positive.
What To Watch Next
Earn Tax Free Income From Your Properties
Make Interest 100% Tax Deductible During Construction
