Shares vs Property

Should you choose to invest in property or shares? There advantages to each in terms of tax and what suits your situation. 

Why Choose Property?

The advantage property has is that you can claim depreciation particularly on post 1985 properties. You can also work on the property and improve its value. Using property as security for a loan means you can borrow at a lower interest rate.

Both property and shares are entitled to the 50% Capital Gains Tax (CGT) discount as long as not held through a company and are held longer than 12 months. If your property has also been used as main residence, you may be able to add holding costs to your cost base not claimed as a tax deduction for assets purchased after 20 August 1991 or where home is first rented out after that time. (Won’t increase a loss).

Why Choose Shares?

The advantage shares have is that dividends from shares attract franking credits which you can claim back at tax time. This is because the company you hold shares in has already paid company tax on its profit so that your tax is reduced by the amount already paid.

Shares are more readily convertible to cash, and costs of entry and exit are much lower than property transfers which include stamp duty and agent’s commission. Take into account your potential liquidity needs and the time frame you intend to invest over. A balanced portfolio across a variety of industries is ideal, and remember even share portfolios can include investments in property trusts. It’s also good to know that negative gearing is possible not just for property but for shares as well.

Which One is Right For Me?

Ultimately shares and property each have their advantages, and it may be better for your situation to choose one over another. However, an ideal investment portfolio will have a diverse range of investments and that can include both shares and property. Speak to your financial adviser to find out what the right option is for you.


Carol is a Senior Accountant at Insight Accounting advice. She is a registered tax agent, has a Bachelor of Commerce and Advanced Diploma in Accounting. Carol’s areas of expertise include tax and property advice.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.