Top 5 benefits from last weeks Budget for Property Investors

With so much information coming out of the Budget release last Tuesday night, it can be hard to sift through and see what is important for you. If you currently own investment property or you’re looking to get in to the market, these 5 benefits you just gained from the Budget.

 

  1. Pay less Capital Gains Tax

Capital gains tax can be reduced if your investment property is rented out to help the housing affordability issue in Australia.

  • Rent the property out at below the market rate
  • Give the property management to a Community Housing Provider (like the NRAS managers, I think).
  • The tenants need to qualify as low to medium income earners (the Government’s definition of medium income is now $150,000 pa)
  • It needs to be in this rental environment for at least 3 years in total.
  • The benefit is that you will be get a 60% discount on the capital gain instead of 50% reduction. Plus you will get more tax refunds or pay less tax on the rental income because of the lower rental income.
  • This could be used to reduce the amount of capital gains tax on existing property with large capital gains that are unlikely to sell within the next 3 years.
  1. Retirees Downsize Opportunity

Retirees can downsize their home and put up to $300,000 each into super regardless of their age.

  • This might free up more houses for investors and owner occupiers,
  • might take some pressure of property prices at the mid to high property prices.
  • Might put pressure on the property prices at the lower end of the market where the retirees will be purchasing. Better to secure this type of property now.
  • This could open up market to sell to retirees property that is more suited to their situation that is not a retirement village. Dual living houses and small lot properties with good facilities and close infrastructure.
  1. Property Hot-Spotting

The Government will allocate extra funding to open up property opportunities in western Sydney.  This could be the start of more specific funding to promote areas where population growth is expected.  This area of western Sydney could be a potential future property hot spot.

  1. Government Cuts Bank’s Profit

The bank levy will reduce bank profits so there is a chance they will increase interest rates to compensate for the levy.  To give you an idea the levy on NAB alone will reduce their ‘before tax’ profit by 4.0% pa ($367m).  Might be time to talk with your finance broker about your current interest rates.

  1. Government to sell off assets

The Government will release new land to be used for development sites – this might help take some pressure of land prices.

 

 

Tell us what else you found interesting in the Budget and if you have any questions about how this may affect you let us know, we’d love to hear from you.

 

If you liked this information please make sure you go to our Facebook page and Like us to keep up to date with all things Property.

 

Until next time, keep connecting.

Top Tips to know before buying an Investment Property

Recently, many Australian home owners are beginning to invest in the property market; in fact, the Australian Taxation Office (ATO) confirmed that one in seven Australians own one or more investment properties. Even though the property market has dramatically slowed down a bit, it didn’t affect the number of Australians that are willing to invest in residential properties.

Many smart property investors in Aus know that there is a time and place to invest in residential property. The property market has recently experienced a slump but is gradually showing good signs of recovery as local and central governments continue to encourage investors back into the market using various incentives.

The Best Time to buy a property:

Trust me; this is the best time to start thinking and searching to acquire an investment property. Why? Because when you buy at the bottom of the market and follow the recovery curve upwards to the top of the market, you will gain a significant capital growth provided you buy from the right source.

You can achieve significant capital growth by applying very effective strategy.

There are so many building and finance companies that are prepared to freely show investors how they can easily get into their first, second or third investment property with a clever finance structure using  equity and taking advantage of  incentives, concessions and rebates from the government. But first the home owner must meet some basic requirements.

The 3 Basic Requirements Include:

  1. The property investor must a combined or single taxable income of $80-$90k or more
  2. The Property investor must be under 60years old and still have at least 5 working years or more in the workforce
  3. The Property investor must have at least $120k equity at their home.

Once these 3 requirements are met, the property investor would now be in a better position to enjoy full advantage of any government incentives, concessions and rebates available.

Most of these companies understand that Australian home and business owners are often too busy working for a living that they rarely find the time to learn about how to successfully buy a residential investment property.

They barely even know about the tax benefits that are received by simply acquiring one or more properties which can save them some thousands in taxes and interest dollars on a mortgage over a 10 year period.

 

 

Education is the key:

An average home owner may not understand that they can create more wealth by investing in assets that have the potential to generate considerable profits and capital growth over time without wasting much of their time or physical effort.

Also, a working class Aussie has the mindset that there is only one way to make money and that’s by offering your time and services in exchange for a good hourly rate of pay. Many of them do not think there could be any other way to make money.

That is why education remains the key, and companies that are in this industry are eager to teach home owners and investors how they can easily do this and show them how it can guarantee their financial future and security.

Five Tax Deductions for your Investment

Five Tax Deductions for your Investment

Happy end of financial year eve!  Yes, apparently this is ‘a thing’ now and some people are even throwing parties for today.  What’s more interesting is that (listening to the radio this morning) people are now doing new financial year resolutions!

Aside from parties and resolutions, many of us are thinking about tax refund time and in particular, getting a decent refund due to their investment portfolio.

 

So for anyone that this is there first year, generally speaking here are a five deductions to remember and conside when speaking with your accountant.

 

Repairs and Maintenance

If you need to make good or remedy defects in the property – these are claimable.  Painting, maintenance plumbing, maintenance electrical work also falls under the banner of ‘repair’ and can also be claimed.

These (above) are all classed as work being taken out to a small section of the property – but keep in mind when you start to replace whole sections, you are now jumping into asset replacement and the expenses will not be classes as a repair.

Improvements, which are the types of work where you start replacing or changing the nature of the property, are capital expenses and you should be depreciating these over their expected life

 

Tenancy Costs  

Advertising costs are tax deductable, as well as letting fees.

This includes advertising with local real estate agencies and posting adverts in newspapers.

Basically any expense you have incurred preparing or varying the lease with your tenant/s is a deduction.

 

Holding Costs

Body corporate fees, cleaning costs, gardening, building and contents premiums, rates, security monitoring costs, pest control, property management fee’s – all generally tax deductible upfront.

 

Interest

By far the best deduction in negative gearing.  Provided your property is available for rent, the interest incurred on the money you have borrowed for the investment is tax-deductible.

 

Insurance

Cover is  tax deductible and can protect against loss of rent, rent default, theft by tenant/s, building damage.   Mortgage insurance is not immediately claimable but is depreciated over time as a part of the borrowing costs.

 

Tip: Keep proper records in order to make the claims – even when you sell the property – rule of thumb is to keep records for 5 years since date sell your rental property.

 

If you need a referral to speak with one of our preferred Accountants, please contact us at (07) 3420 5888 or email at info@picgroup.com.au

 

Banks Vs Mortgage Brokers

When it comes to raising finance for your housing purchases, I have seen a large shift in people using Brokers instead of going straight to their Bank.

For anyone who doesn’t know, Mortgage Brokers act like the middlemen between Banks/Lenders and the borrower – you!

Banks work directly with the home-owner to provide the finance needed, so it is like taking a whole person out.

Most home-owners will turn to a Bank directly, mainly because it is the most obvious choice, but also because we see the Ads on TV with the Interest Rate advertised which is how we come to giving them a call.

Sometimes you will find that your Bank will even call you once you have a substantial amount of savings in your account, and offer you a consultation and a rate.

We also tend to feel somewhat secure and safe with using one of ‘the Big 4’ too because we are familiar with the brand.

The downside is that the process to go direct to a Bank can be frustrating.

Due to the size of the organisation you can have long wait times on hold, and just the overall bureaucratic system that is a ‘Bank’ can get a bit too much for some.

For some people who have trouble qualifying or have an abnormal deal, they will often be turned away from the Banks, which leads them to a Broker.

What some people don’t realise is pricing with Brokers can be just as competitive as a Banks.

A Brokers experience can be more consistent too – as they are across the board with all different Lending partners and their packages.

They compare the rates to a large number of Banks and Lenders all at once, kind of like ‘Webjet style’ application, and may even find more options and better rates.

Now, when it comes to fees some Brokers are fee for service, so it is worthwhile asking if they charge you or if they get their income from the Bank you end up getting the loan from.  It is not uncommon to find a Broker who doesn’t charge either – it is just a question to ask.

Here’s my view…

Both options have  a human attached to them so you can always make mistakes with any (and every) part of the process – But I would say having two sets of eyes look over everything is better – which makes choosing a Broker more appealing to me.

I, much like you, am way too busy with life and don’t have the time to be chasing a Bank so the idea of having someone else to all the running around for me is a deal!

To sum this up, if you want someone to guide you through the loan process, and be more accessible, a Broker may be a good choice for your situation.

In saying that be savvy yourself, and compare the options you are given to make sure you have the best rate and package for you.

Also, the power of referral is exceptional when it comes to this – if you have someone close to you who has referred you to their professional, then give that a go.

Yay Or Nay To Allowing Pets

Nowadays our pets are becoming more and more adored and considered as a family member – after all pets add so much value to our lives!

With over 25 million pets in Australia, and nearly 5 million of Australia’s 7.6 million households, are homes to pets.  At 63% we are one of the highest rated countries for pet ownership, with 39% household having a dog.

So it is clear to say we like having them around and we will continue to (maybe even more as population grows) into the future.

With these stats in mind, I wanted to discuss the option of  making your portfolio four legged friendly, and  show some guidelines to follow to help minimize your risk.

As I am sure, if you have heard a story about this, 9/10 it is a bad case and as a result it’s natural for Investors to be wary of allowing pets because of the damage that might occur.

I personally have not had a bad experience with pets, and in my opinion it does depend on the type of house, suburb, tenant, and property management.

In saying that, if I have a great looking tenant applying for a property I wouldn’t want to scare them away by advertising strictly no pets – pets on consideration is always a good option to keep the applications coming through.

So say you have an application where the tenant has a dog already and you are considering it…Here’s what I would do;

Check the tenant’s references, and find out if there ever was a note or complaint that the pet created disturbance or damage during a previous tenancy.  Also check if  the pet for this tenancy the same as in the other tenancies?

When that all comes back fine then I would;

Grab all the details of the pet, like age and breed and add in some additional term within the Agreement so there is a firm understanding to the consent that you have granted.  Also put a restriction to the number of pets allow at the property.

Then put in place whether the pet is allowed inside or outside, and make it the responsibility of the tenant to fumigate (internally or externally), and steam clean the carpets upon exiting.

Now check your Landlord Insurance policy to see if pet damages are covered within your policy.  Usually this is not standard, but it can be put in for an extra cost.

Manage your risks by doing all of these steps and make sure routine inspections are happening regularly (get photo’s) to avoid anything big and ugly popping up at an exit report.

I believe if you find the right tenant who respects the house, and the right property management team to keep everything on track – then you should be OK 🙂

Of course everyone is different and will have a different experience…  At the end of the day you make the call you are most comfortable with

But with the number of people owning pets these days, are you prepared to narrow down the potential tenant pool by not even considering a pet?

Tell us what think 🙂

10 Things Successful People Do Everyday

Being the beginning of the year it is a great excuse to start a-fresh and look towards what you can achieve.

Why not make this the BEST year yet!

I hear about how successful everyday people are and it got me thinking – Do they do anything different in their daily or weekly routine?

Do they put money in a private back up place for emergencies?  Do they do a random sporting activity in the evenings?  Are their offices Feng Shui perfect?  Do they work back late every night, and are the first in the office the next day?

After talking with a few people & clients that I class successful – it actually wasn’t anything too out of the box.

But to be honest – why not keep it simple?

So.. Here are my list 10 things I found that successful people do.

  1. Check it off.

It might seem simple, but never underestimate the power of a to-do list. Checking off tasks is a great way to keep track of all of the little things you want to accomplish in a day.

I start each day going to my book, and writing Monday 4th January, and then do the next day so I can also keep track of each day’s priorities.

  1. Have a filing system.

If you work on a computer, I highly recommend having a special system for the way you name your files and folders. Whether it’s by content or date, pick an organizational structure that will make them easy to find later on.

  1. Watch the clock.

Be on time! Whether it’s for an important meeting or even a casual lunch with friends, being punctual is a sign of respect. It’s also a good habit to make for every area of your life.

  1. Be kind.

Some people think you have to be the devil in The Devil Wears Prada, or Gordon Ramseyto rise to the top. But I beg to differ. The most successful people in my life have all gotten where they are by being kind and supporting each other.

  1. Make friends.

The most successful people I know actually aren’t the ones who stay tied to their desks 24/7. They’re the ones who take time out for happy hour with an industry colleague or a coffee break with coworkers. It’s OK to leave your work for a few minutes to chat. You’ll make important connections and probably feel even more inspired when you get back to your desk.

  1. Treat your body right.

If you want your mind to function properly taking care of your body is key. So take the time to exercise, eat right, and get enough sleep! Your work will suffer if you don’t.

  1. Make your bed.

Yes, I am sure that there are lots of successful people out there with unmade beds. But my point is that a clean space makes for a clear mind. So maybe for you a clean space doesn’t mean making your bed everyday – But doing something to tidy up like cleaning the kitchen or organizing your desk will make a difference.

  1. Make time for numero-uno.

This might seem counterintuitive to a lot of people, but if you want to be successful, I think it’s also important to do something that isn’t tied to your work every day. Get a massage, hang out with friends, or find a hobby you enjoy. Being well-rounded and taking time to relax will serve you well and keep you energized and inspired.

  1. Keep learning.

The most successful people that I know make a point to learn something new on a daily basis. Whether that’s soaking up information while paging through an issue of Business Review Weekly, taking seminars, or attending conferences, make sure to always learn new skills and stay on top of your industry.

  1. Set measurable goals.

Goal setting is so important. Think in the long term, but make your goals are specific as possible and revisit them every day. Create a vision board or a list and keep it where you will see it every morning. Dream big and you will achieve big things.

I hope that maybe reading these you picked up one or two things you can incorporate into your day 🙂

Remember: Your Success Is Our Success – The PiC Group