Minimise tax on your investment property

Minimise tax on your investment property

It is no secret the property market has been hot over the past year. Sydney and Melbourne are in “boom” territory and the sunshine state is also giving Brisbane investors a warm feeling.

No wonder then that many investors, upgraders and baby boomers are cashing in on their nest eggs and selling for a profit while the good times roll on. After all, it was one of the world’s most famous investors, Warren Buffett, who said: “Buy in gloom, sell in boom.” Selling now could be a beautiful reward for years of hard work and sacrifice.

However, capital gains tax (CGT) can quickly eat into that attractive figure on the contract and make your cash payout much smaller than you originally thought.

The 10 best ways to minimise your tax when it comes to selling property.

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Australians the Richest in the World - Thanks to Our Homes

Australians the Richest in the World – Thanks to Our Homes

Yes folks it’s now official, Australians are the richest people in the world thanks to our homes, according to the latest annual study by Swiss investment bank Credit Suisse.

The median Australian adult was worth more than US$225,000 ($258,000), well ahead of second-place Belgians with a median value of US$173,000, according to the study.

The Italians, French and British followed, all worth around US$110,000.

Credit Suisse says Australians deserve their spot at number one because of the rapid accumulation of wealth, especially household property wealth, over the past 14 years.

Australians the Richest in the World - Thanks to Our Homes

“These are obviously remarkable figures for Australia,” Credit Suisse Private Bank chief investment strategist David McDonald said.

“We are well positioned globally in terms of wealth, as well as the spread of wealth.”

Credit Suisse also classified Australia as a “medium inequality” country, meaning that the richest 10 percent controlled between 50 percent and 60 percent of the country’s net wealth.

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The thing about low interest rates

The thing about low interest rates


What’s not to love about your below-five or six per cent home loan interest rate? Low interest rates equal more money in your pocket, right?

While low rates mean families are more able to finance home purchases, and businesses are more cashed-up to build offices and factories; with low interest rates on borrowings, comes low interest rates on savings.

Given that many people work towards retirement with some variant of the ‘retire on my savings, superannuation and property income’ plan, low interest rates can have a flip-side; low interest rates can deliver low investment returns.

The reality of our present low interest rates is that they are a response to the global financial crisis and the sub-prime mortgage market crisis.Our record-low rates are the after-shocks of these events. And the knock-on impact of slower housing growth has been widely discussed ever since.

The thing about low interest rates

So, yes, low rates for the average family – and investor – have delivered real money into real pockets, as well as helping many get much further ahead on their mortgage payments. And this is only a good thing.

But keep in mind that when interest rates increase, it will be a response to improving economic conditions.

So, although rates remain on hold for now, it seems likely the Reserve Bank of Australia will eventually raise interest rates.

It may be helpful to consider then the flip-side of an increase in interest rates: greater returns on all asset classes, including real estate.

Most investors miss out on tax rebates

Most investors miss out on tax rebates

Even small items like smoke alarms and shower curtains can be claimed on rental properties.

Four out of every five property investors are missing out on potentially thousands of dollars in tax rebates, by forgetting to claim on everyday household items.

Shower curtains, smoke alarms, lawnmowers, roller-door motors, microwaves and garbage bins are among the dozens of minor objects in the average rental home that landlords routinely forget to claim depreciation on.

New research conducted by tax depreciation specialists BMT has revealed that figuring in these assets can increase the cash flow generated by a property by around 15 per cent.

“Property investors tend to focus on the larger-ticket depreciation items available, such as the structure of the house and large plant items in the house,” said BMT managing director Brad Beer.

Most investors miss out on tax rebates

“However it’s often the smaller items which can make a significant difference to an investor’s cash flow.”

Beer, who recommends investors engage a qualified quantity surveyor to create a deprecation schedule for their property, says investors can often name a few depreciable items, such as carpet, hot water systems and light fittings. “But a range of less obvious items, such as garbage bins, exhaust fans or smoke alarms, are often overlooked,” he says.

BMT conducted their survey among their 190 staff Australia-wide, asking them which items their clients found “very surprising” when told they could be depreciated or which they’d missed out in their DIY filing of depreciable items. The company has more than 8000 regular referrers to their business, including property professionals and accountants who recommend their services to property investors.

They found the most common assets never claimed for were items like garden sheds which have, on average, a depreciable value – the purchase price of the item minus its salvage value which can then be claimed for over its useful life – of around $855 and ceiling fans ($265) right down to smaller expenses like shower curtains ($30). Frequently missed were other assets like solar-powered generating systems ($5500), automatic window shutters ($800) and intercom systems ($745).

Story source: ; Story by Sue Williams

Reserve Banks Interest Rate Policy Decision

Reserve Banks Interest Rate Policy Decision

At its meeting yesterday, the Reserve Bank Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy is continuing at a moderate pace, helped by firmer conditions in the advanced countries. China’s growth remains generally in line with policymakers’ objectives. Commodity prices in historical terms remain high, but some of those important to Australia have declined this year.

Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low. Emerging market economies are receiving capital inflows. Volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates, or other adverse event, over the period ahead.

Reserve Banks Interest Rate Policy Decision

In Australia, growth was firmer around the turn of the year, but this resulted mainly from very strong increases in resource exports as new capacity came on line; smaller increases in such exports are likely in coming quarters. Moderate growth has been occurring in consumer demand. A strong expansion in housing construction is now under way. At the same time, resources sector investment spending is starting to decline significantly. Signs of improvement in investment intentions in some other sectors are emerging, but these plans remain tentative as firms wait for more evidence of improved conditions before committing to significant expansion. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend over the year ahead.

Interest rates are very low and for some borrowers have continued to edge lower over recent months. Savers continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices has been slower this year than last year, though prices continue to rise. The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.

Home Owners Paying Off Loans Faster

Home Owners Paying Off Loans Faster

Home owners are taking advantage of record low interest rates to pay off their mortgages faster.

The National Australia Bank says new figures show 85 percent of its mortgage customers pay more than their minimum monthly repayments, Fairfax Media reports.

Such NAB customers are ahead by an average of 13 months now, compared with 12 months a year ago — a “meaningful” shift considering the size of the bank’s mortgage book, said Antony Cahill, NAB’s executive general manager of lending and deposits.

Home Owners Paying Off Loans Faster

The bank has about 16 percent of the mortgage market with a home loan book worth $241 billion.

NAB said its customers are also paying off credit card debt faster, with the number of accounts paid in full rising six percent in the past year.

“These are themes that point to the Australian consumer being a little bit more careful, a little bit more prudent in terms of understanding debt and ensuring they keep that under control,” Mr Cahill was quoted as saying.

Last week the major banks cut fixed interest rates to new lows of less than five percent.

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Are Australians missing investment opportunities

Are Australians missing investment opportunities?

Many Australians with home loans are aware of the ability to use the existing equity in their properties in order to further their real estate investment goals but many individuals aren’t actually utilising their equity as they could.

New research from Westpac shows that just 11 percent of Australian homeowners are planning to use their equity to upgrade.

That said, upgrading isn’t the only option. Those with sufficient equity in their properties can also use it to invest in real estate, too.

What is home equity?

A property’s equity can be calculated by deducting the loan balance from the home’s value. If homeowners have purchased real estate in high-growth suburbs, their equity will not only rise as they pay off their mortgages, but also in conjunction with capital growth.

This equity can be used for home renovations, property investment and more.

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Billions worth of new houses and apartments have been approved

Billions worth of new houses and apartments have been approved

NEW HOUSING figures are clawing their way back up with new figures revealing billions worth of new houses and units approved for construction.

Melbourne has the highest value of construction throughout the country according to an Housing Industry Association report with more than $385 million worth of property already given the go ahead.

South Morang, about 22km from the Melbourne CBD is not far behind with $277 million worth of construction slated to go ahead.

The Homebush Bay and Silverwater region in New South Wales is also expected to undergo a building surge with more than $257 million worth of development approved.

The HIA has analysed which are Australia’s hottest housing markets by combining the value of approved developments with population growth.

It rates the ACT as Australia’s hottest housing market with Crace, about 9km from Canberra the top performing area.

It had an annual population growth of 58.1 per cent during 2012, 2013 and $112 million worth of new dwelling approvals.

Billions worth of new houses and apartments have been approved

Bonner, about 13km from Canberra, was the second strongest performer with its population up by 43.3 per cent and $121 million worth of building approved.

In the top twenty the ACT took out the top three spots.

There were eight Victorian locations, four in Western Australia, three in New South Wales and two in Queensland.

According to the HIA figures new dwelling commencements in Australia rose to 162,000 during 2012, 2013.

Both Tasmania and South Australia didn’t make it into the top twenty list this year.

HIA senior economist Shane Garrett says the two states had not made it into the list for the past two years.

“However, the gradually improving situation in both markets means that we can look forward to them battling it out at the national level in the near future.’’

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Property Prices End the Financial Year on a High

Property Prices End the Financial Year on a High

PROPERTY prices have ended the financial year on a high with the latest figures revealing a 10.1 per cent increase compared to 12 months ago.

The RP Data-Rismark June Hedonic Home Value Index results reveal that values went up another 1.4 per cent during June.

Values increased in most capital cities with Sydney and Melbourne leading the charge.

Adelaide and Darwin were the only capital cities to experience a drop in values during the past month.

RP Data research director Tim Lawless said the increase in June made up some of the ground lost in a 1.9 per cent drop in May.

Sydney dwelling values increased by 15.4 per cent for the year, while in Melbourne values rose by 9.4 per cent.

Mr Lawless said the Brisbane housing market was starting to gather some pace, with its values up 7 per cent for the year.

Property Prices End the Financial Year on a High

Values in Adelaide and Canberra went up by 2.9 per cent, while in Hobart they increased by 2.5 per cent for the year.

Darwin values went up by 5.7 per cent for the year, but dropped by 3 per cent in June. In Adelaide values dropped by 0.7 per cent in June.

Mr Lawless said it was properties in the middle price range of the market which had experienced the highest level of price growth for the year.

“Dwelling values at the most affordable end of the capital city housing markets have moved 8.8 per cent higher over the past year compared with a 10.3 per cent capital gain across the most expensive suburbs and a 10.6 per cent increase across the broad middle fifty per cent of the capital city market,’’ he said.

Mr Lawless does not predict any drop in housing values for as long as interest rates remain low.

He said affordability would likely have more affect on buyer demand.

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Patchy House Prices Lead To Overall Increase

Patchy House Prices Lead To Overall Increase


Patchy price variations of residential property in Australia’s capital cities resulted in an overall median price increase in the March quarter of 2014, according to the Bendigo Bank/Real Estate Institute of Australia(REIA) Real Estate Market Facts.

REIA President  Peter Bushby says, “The weighted average capital city median price increased 1.9% for houses and 1.7% for other dwellings during the quarter.”

“The weighted average median house price for the eight capital cities is now $606,517 with Sydney, Melbourne, Adelaide, Canberra,Hobart and Darwin all contributing to the rise.”


“Brisbane and Perth fell by 1.1% and 1.6% respectively.”

“At $782,973, the Sydney median house price is the highest of the capitals . Hobart remained the lowest priced at $385,000, which is 36.5% lower than the national weighted average.”

“Compared to the same time last year, the difference is much starker. The weighted average median house price rose 13.1% over that period.”

“For other dwellings, the weighted average median price for the eight capital cities was $483,230 over the March 2014 quarter and that’s a 9.5% rise from a year earlier.”

“The rental market tightened further and as a result, median house rents increased in most of the capital cities and solid increases were also seen in rents for other dwellings.”

“A tightening rental market is another indicator that the Federal Government did the right thing leaving negative gearing in its current form and its retention is critical to maintain the supply of housing and the level of rents,” concluded Mr Bushby.

The Real Estate Institute of Australia (REIA) is the national professional association for real estate agents in Australia.