Tag Archives: First National Burnie

What happens when your landlord decides to sell?

What happens when your landlord decides to sellWhen the owner of your rental property decides to sell, communication between you and you property manager becomes paramount.

The first and most important piece of advice is don’t panic.

The sale of a landlord’s investment property doesn’t necessarily mean you will have to move.

In fact, well-presented properties with a tenant and lease in place are usually more appealing to investors than homebuyers, so the chances are high that a new investor will buy the property and nothing will change from your perspective.

The first and most important thing is to cooperate with your property manager about access arrangements concerning inspections and photography.

Next, you might even like to talk to your property manager about advice on how you could buy the property. Many landlords jump at the opportunity to discuss a sale to a tenant.

Signing a new lease also improves investor appeal so you can ask about that too.

Six capital gains and depreciation facts for property investors

One question investors often ask about claiming depreciation on a rental property is ‘how will these claims affect Capital Gains Tax (CGT) when the property is sold?’

CGT can be a complex topic for investors to understand, particularly as the answer to the above question can really depend on the scenario of the individual property investor.

Introduced on the 20th of September 1985, CGT is basically the tax payable on the difference between what it cost you to purchase an asset and the amount you received when you disposed of it. In the case of an investment property, this is the difference between the original purchase price of the property including any capital buying costs and the price the property is sold for plus any selling costs. When you sell an asset such as a property, this triggers what is called a ‘CGT event’ and the owner will either make a capital gain or loss on the property.

When an investor has been claiming property depreciation, the cost base could be altered, therefore changing the capital gain or loss. To help explain the implications of property depreciation on CGT, here are six facts investors should be aware of.

1.    What is property depreciation?

Property depreciation is the wear and tear of a building and the plant and equipment items within it. The Australian Taxation Office (ATO) allows owners of income producing properties to claim this depreciation as a deduction in their annual tax return, meaning they pay less tax. Property depreciation is made up of two main parts; capital works deductions and plant and equipment depreciation.

2.    How do capital works deductions affect CGT?

Capital works deductions are available for the wear and tear on the structure of the building. Examples of items which can be claimed include bricks, walls, floors, roofs, windows, tiles and electrical cabling. The capital works deductions will reduce the cost base of the property which will add to the capital gain and therefore increase the amount of CGT applicable for the owner of the property.

3.    How does plant and equipment depreciation affect CGT?

Depreciation deductions can be claimed for the mechanical and easily removable plant and equipment assets contained within an investment property. When a property is sold, a gain or loss is calculated separately on these items. This is because often these assets will have been updated, removed or replaced over time. This means that the original assets contained in a property at the time of purchase can be very different to the assets contained in the property at the time of sale.

If an investor were to increase the value of plant and equipment during the time the property is owned (for example by replacing the carpets or completing a renovation) this could increase the cost base of these assets and may therefore reduce the CGT when the owner sells the property. If the value of assets in the property when sold is less than when purchased the cost base will be reduced, therefore increasing the amount of CGT.

4.    What CGT exemptions apply for a principal place of residence?

Properties which are owned by someone who resides, occupies or lives in the property as their home are exempt from CGT so long as the dwelling is used mainly for residential accommodation and is located on land under two hectares in size.

If the owner of a primary place of residence chooses to move out of their home and rent it out, a CGT exemption is available for up to six years after they have moved out so long as they don’t own another primary place of residence.

If the owner moves back into their investment property, then moves out and rents the property again, a new six year period will commence from the time they last moved out of the property. There is currently no limit to the number of times a property owner can do this so long as each absence is less than six years.

Only one property can be classed as a primary place of residence and therefore exempt from CGT at any one time with the exception of the following rules which apply if both properties are treated as the owner’s primary place of residence within a six month period:

  • The old property was the owner’s primary place of residence for a continuous period of at least three months in the twelve months before they sold it
  • An owner did not use the property to provide an assessable income in any part of the twelve months when it was not their primary place of residence
  • The new property becomes the property owner’s primary place of residence

5.    Are property investor’s eligible for a discount?

A 50% exemption on CGT is available to individuals or small business owners who hold an investment property for more than twelve months from the signing date of the contract before selling the property.

6.    Is it still worthwhile claiming property depreciation if it will later add to the capital gain?

The short answer is yes. During the term of ownership, capital works and plant and equipment can be claimed as a deduction at the investor’s marginal tax rate. These deductions will reduce tax liabilities, therefore generating additional cash flow for the investor each year.

When a property is sold, if the owner has held the property in their name for more than twelve months, the owner will be eligible for the 50% exemption. This means that only 50% of the capital works deductions during ownership will carry through to the ‘CGT event’, making it far better for a property investor to claim the capital works deductions and take advantage of the additional cash flow during ownership. Depreciation claims also provide an opportunity for the property owner to invest further or reduce loan liabilities.

When considering selling an investment property, it is recommended that investor’s seek advice from their Accountant about the implications of CGT and the exemptions available. A specialist Quantity Surveyor can also provide advice on the depreciation deductions for any investment property.

For more information on property depreciation, visit the BMT Tax Depreciation frequently asked questions webpage by clicking here or alternatively, speak with one of their expert staff on
1300 728 726.

Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.

How does construction support affordability?

How does construction support affordability?It’s hard to ignore the rapid rate at which homes have been popping up around the country. Construction has been a bright spot in real estate in Australia for some time, with a steady stream of properties helping to support confidence, jobs and keep the economic wheels spinning. Not only that, but it creates opportunities to buy a house.

This impressive activity is showing little sign of slowing down, either, as new figures from the Australian Bureau of Statistics (ABS) show strong growth during May. According to the latest building approval data, the total number of new dwellings approved for construction increased 2.4 per cent during May in seasonally-adjusted terms.

In fact, there has been a 17.6 per cent rise over the 12 months to May. The Property Council of Australia pointed out that this is an encouraging sign for affordability, particularly for real estate in Sydney.

Executive Director Residential Mr Proud noted there were 70,000 more approvals in the past year than in the 12-month period to May 2012, with New South Wales in particular showing strong improvement. Some 57,088 new dwellings were approved in seasonally adjusted terms in NSW for the 12 months to May 2015, a 10 per cent rise on the same period to May 2014. This could represent an important step forward for reducing housing deficits and counteracting rapid price growth.

“The only meaningful way to take the pressure off prices is to increase new housing supply,” Mr Proud said.

Strong growth in multi-unit properties

Construction activity has been especially strong in the apartment segment. Master Builders Australia said multi-unit approvals posted an all-time record in May, with 7,300 dwellings in buildings of four storeys or more approved over the period. While this means multi-unit homes for sale may be more accessible when completed, detached houses still face supply pressures.

Master Builders Chief Economist Peter Jones said policy restrictions on releasing greenfield land may be holding the industry back. This point was echoed by the Housing Industry Association (HIA), which highlighted a 15.1 per cent increase in multi-unit approvals during May. However, approvals for freestanding homes dropped 8.5 per cent over the month.

HIA Senior Economist Shane Garrett said this means policy makers need to do more work to ensure a steady supply of both affordable apartments and houses for sale.

“They must rectify the bottlenecks in the planning system, redress the excessive fees and charges on new residential developments and ensure that the pipeline of residential land will meet the ongoing community demand for new homes,” he concluded.

With such a solid supply of properties in the pipeline, maintaining this level can support affordable and help households buy a home in Australia.

Landlords blind to the benefits of pets

Landlords blind to the benefits of petsFirst National Real Estate chief executive Ray Ellis says that with record low rental yields nationally, property investors should open their eyes to the benefits of renting their investment properties to tenants with pets that have good references.

‘Capital growth has far outpaced rental growth nationally and this has forced yields to record lows. Yet many investors refuse to consider applications from tenants with pets, despite research that shows some are willing to pay slightly more rent and that they tend to stay longer’ said Mr Ellis.

‘The reality is that when landlords agree to flag their rental property as Pet Friendly with First National Real Estate, the chances of getting their vacant property leased quickly grows exponentially’.

The Petcare Information Advisory Service (PIAS) indicates 66 per cent of Australian families have pets so the majority of our 23.13 million population values pet ownership. Yet just 2.1 million families or 9 per cent of the population are able to rent properties with their pet.

The challenge of finding rental properties where landlords will consider pets leads to some 65,000 pets being surrendered to the RSPCA on an annual basis. Unfortunately only some 22 per cent of animals surrendered are able to be re-homed.

‘Because tenants understand how difficult it can be to rent a property with their pet, many are prepared to discuss the amount of rent they’ll pay. They often have references from previous real estate agents and landlords that make their application more attractive’ said Mr Ellis.

‘Our Property Managers can take additional steps to protect a landlord’s interests such as adding specific clauses to the lease, requiring annual steam cleaning of carpets, and in some states, negotiating a pet bond. Good tenants understand these are realistic trade-offs that help their landlord to feel more confident about their intentions’.

On any given day, about 5.7 per cent of First National Real Estate’s vacant rental properties are available through the network’s Pet Friendly Rental Search feature, with the most Pet Friendly states being Queensland and Tasmania – equally offering 12.5 per cent of vacancies as Pet Friendly. The network assisted Dr Emma Power’s University of Western Sydney 2013 research – Renting with Pets in Sydney – and has cooperated with the PIAS in the creation of educational booklets and the promotion of socially responsible pet ownership. It encourages landlords to discuss their concerns with Property Managers and weigh the merits of all applications.

What are our alternatives to stamp duty?

What are our alternatives to stamp duty?If you were looking for one controversy that has excited debate in the property market over the past few months, it’s stamp duty. The contentious tax has been brought into discussions about housing supply, affordability – even the recent debate on foreign investment has touched on the role of this tax. Fortunately for those buying a house or land for sale, it looks like the writing could be on the wall for this lucrative levy.

In an address in Melbourne, Treasurer Joe Hockey made his position clear on tax reform, pointing out that state and territory governments need to look elsewhere for sources of income. He highlighted that it is one the nation’s most inefficient and inequitable taxes, and set the challenge to develop another way of raising revenue.

Finding an alternative

If you were looking for a little perspective on why stamp duty has become the hot topic, new research from the Housing Industry Association (HIA) should provide it.

The HIA’s winter 2015 edition of the Stamp Duty Watch report shows that the typical stamp duty bill on buying a house now amounts to over $20,000 on real estate in Cairns, Melbourne and Sydney, and has increased significantly in both NSW and Victoria over the past year or so.

“Independent research conducted for HIA last year provided compelling evidence of the benefits to Australian living standards and economic growth from the replacement of stamp duty with more efficient, broad-based revenue raising measures,” said Shane Garrett, economist at the HIA.

GST in, stamp duty out

The Property Council of Australia has also pointed out that while governments need to focus on substituting the levy, it needs to go hand in hand with a range of tax changes. In particular, Chief Executive Ken Morrison pointed out the GST reforms should be on the table.

In fact, a new Property Council survey uncovered strong support for increasing GST and abolishing stamp duty, which could indicate the direction that governments will go in the future. Around three quarters of those surveyed believed it was inevitable that GST will rise over the next 10 years, and over two thirds of people supported stamp duty being removed.

“Some 65 per cent of respondents believed the GST to be fair or very fair, and only 35 per cent as unfair, with most citing its benefit as a tax that cannot be dodged,” Mr Morrison said.

With public support firmly behind the abolition of stamp duty, only time will tell whether governments take this on board. If they do, those buying real estate in Australia are sure to reap the rewards.

Lending for real estate improves

Lending for real estate improvesInvestors have taken an increasingly active role in the Australian real estate scene, but it looks as though owner-occupied finance is on the road to recovery. Finding the balance between the two hasn’t been easy, but recently released figures from the Australian Bureau of Statistics (ABS) could indicate that the market is tilting back into alignment.

It’s hard to argue that investment hasn’t been rampant of late. CoreLogic RP Data analysis has revealed that investors commitments were worth $12.9 billion in March, a staggering 105 per cent increase in a little under four years. The Reserve Bank and regulators have been trying to get a handle on the insatiable demand for homes for sale, but ABS housing finance data suggests a change could be on the horizon.

Construction takes the cake

The total value of lending for property climbed 2.9 per cent during April in seasonally-adjusted terms, according to the ABS. Owner-occupied housing experienced a sizeable jump, rising 3.1 per cent over the month. Meanwhile, lending for investment homes rose a slightly slower 2.6 per cent.

Even more encouraging for the property market, the number of loans taken out for new home construction increased over the same period. There were 4.3 per cent more of these commitments recorded, as well as a 1.6 per cent jump in the number of loans for purchasing a newly construction property – a promising figure that Master Builders Australia has welcomed enthusiastically.

Chief Economist Peter Jones said this data could show that new home building is taking the lead in the finance department, which is encouraging for the supply of affordable real estate in Australia.

“The latest housing finance figures for April shows a welcome turnaround away from the focus on investment toward finance for the construction of houses,” Mr Jones said.

“The industry is looking to the non-investor sector to strengthen over the next 12 months to ensure that this rebalancing takes hold.”

What about first home buyers?

What’s more, the Housing Industry Association (HIA) hinted that first time buyers are becoming more active in the property market. ABS figures show that the number of loans for freshly-minted buyers as a proportion of all dwelling commitments rose to 15.2 per cent in April, up from 15.1 per cent in the previous month.

This might not seem like a big difference, but HIA Chief Economist Dr Harley Dale said it is the highest level seen in a year. It’s another encouraging factor for the property market, as it could indicate that these buyers are becoming a bit more confident in their pursuit of home ownership. In fact, Dr Dale suggested that the percentage figure could be higher if it were to include those first time buyers who get their start in the investment market.

If the popularity of housing finance for construction persists, the mix of property for sale can continue to expand – and young buyers may find themselves in a good position to look for houses for sale in the coming months.

How to prepare your home for open inspection

How to prepare your home for open inspectionGetting your home ready for sale can be a challenging process. Between organising your possessions and deciding on the next move, hosting an open home can often seem arduous. Showing your home off its full potential can put you in the best position for a sale, but there are a few things to organise before the day rolls around.

Clean

Open homes present the perfect opportunity to give a great first impression, but buyers can be turned off a home that appears unkempt. It’s therefore vital to give your house a thorough clean to ensure each and every space is presentable. Polish surfaces, sweep away cobwebs from ceilings, corners and behind doors, and deal with any stains on carpeted areas. Wipe the insides of cupboards and dust shelves. Watch out for grimy fingerprints on door frames, mirrors and windows.

Be methodical in you approach – systematically go through each room. You’ll be amazed what a different these small touches make.

Repair

No amount of cleaning can hide a home in need of obvious repair. Spend the few weeks before the inspection dealing with any minor repair jobs on the property to ensure prospective buyers won’t be turned off. Replace cracked window panes, broken tiles and sand and paint chipped plaster. Test plumping and water fixtures throughout the home for leaking or faults – the savvy buyer will often test these during the walk through.

Arrange

You can get a professional to style your property prior to inspection but there are also a few simple tricks you can do yourself. Tidily make the beds, carefully arrange cushions on the lounge suite and straighten frames or mirrors on the walls. Any knickknacks on surfaces should be neatly organised or put away. Cast a critical eye over each room for unnecessary items and awkwardly arranged furniture and make sure nothing feels cluttered.

Vases of flowers or scented candles throughout the home will also add a lovely personal touch – buyers will appreciate the extra effort to make the home seem welcoming.

First National launches national bushfire appeal

Visit a First National office to make a donation

Visit a First National office to make a donation

The First National Real Estate network, through the First National Foundation, has launched a national bushfire appeal and joins the Red Cross in its appeal for all Australians to dig deep and donate to assist those who have been directly affected by the recent spate of bushfires across the country.

Australia is prone to disasters of all kinds, especially over the summer and wet seasons, which is why we are urging everyone to give generously and support those communities most in need,” Mr Simon O’Donoghue, Chairman, First National Foundation said.

“Our members have always been involved with the support of their local communities and, over the past six years, the First National Foundation has donated more than $2,200,000 to the Australian Red Cross as a result of our fundraising efforts.

“People know that when they donate through First National Foundation, their donation will reach the people who need it most from individuals, families and farmers, right through to the community level.”

Thousands of people across Australia have been affected by bushfires with many suffering untold losses including their homes, pets, livestock, sentimental and personal effects, and in some cases, their livelihoods as well.

“At times like these, when communities are threatened by natural disasters, we redouble our fundraising efforts through the Foundation, which donates to the Australian Red Cross and its assistance to Australians in disaster preparation, response and recovery,” Mr O’Donoghue said.

“Even today, as the nation faces one of the worst fire-prone seasons in decades with the current heat wave conditions, the money we have raised in the past is still being used to assist those areas affected by some of the most devastating disasters in Australia’s history.

“Many of these people are the ones that we have helped to purchase their homes, or move into a new one and we feel their need as much as if it were our own.

“This is why we value our partnership with the Red Cross.  It affords us the opportunity to give back to the communities where we live and work, as well as be involved in activities that can make a huge difference to our clients.”

22 Tips To Child Proof Your Home

Install safety gates at the top and bottom of stairways

First National Real Estate offers some handy tips and hints on how to childproof your home – increasingly essential information for homeowners and investors alike.

Kitchen and Wet Areas:

  • Ensure scald-preventing devices are installed on bathroom taps, so the temperature of bathwater can be measured, and the water thermostat is turned down to 37 degrees Celsius
  • Unplug and store all electrical gadgets
  • Install latches and/or locks on cabinets, drawers and lids (toilets are a great place for kids to throw items into)
  • Keep handles and cords out of reach by facing handles into the centre of the stove, bench or towards the rear wall. Cords should be kept short
  • Store cleaning supplies, hygiene products and other points and dangerous items such as razors, knives, etc in a locked closet or cabinet

Living and Sleeping Areas:

  • Securely attach entertainment and shelving units to the wall to prevent them falling onto, or being pulled down by, a child
  • Place screens, preferably wall mounted, around fireplaces, radiators and other heating units
  • Shorten strings and cords on curtains and blinds or tie them up as high as possible to avoid children becoming tangled in them
  • Remove any poisonous plants and ensure house plants are kept out of a child’s reach

Outdoor Areas:

  • Ensure pools, and spas, are fully fenced, with well-maintained, self-closing gates
  • Fence off play areas from the street and the driveway because cars and kids don’t mix
  • Safely store mobile BBQ’s, and ensure they are properly covered when not in use

General hints:

  • Place safety gates at the top and bottom of all staircases, and in doorways leading to rooms deemed unsafe or housing valuable and breakable items
  • Accordion style gates with large openings that children could fit their heads through should be avoided
  • Protect electricity outlets with plastic tamper-proof socket covers, to prevent children from inserting fingers and other objects into the sockets
  • Place stickers on glass doors and low level windows so children don’t run into them and move furniture with sharp corners, such as coffee tables, out of hallways and other places where children run about.  Pad sharp corners with foam or cushioning
  • Never leave a small baby or child alone with pets or other children as they may unintentionally hurt the child or pet and cause it to nip, bite or hurt the child in return
  • Never leave a bucket of water in or around the home.  Children can drown in inches of water
  • Never place a crib, bassinet, high chair, play pen or swing near a window
  • Keep plastic bags and deflated or burst balloons away from young children – they can choke or suffocate very easily
  • Babies should never be placed on anything above the ground, like a changing table, unless you have a hand placed on the baby

Handling Connections When You Move

Did you know that the average time it takes to disconnect the average home’s utilities and reconnect them at your new address is nearly six hours?

Who has that sort of spare time when they’re in the middle of moving?

It would be great if it were only the water, electricity and gas you had to contend with. However, these days there’s usually also the phone, pay TV and Internet that all need to be disconnected and then re- connected. That means dealing with tedious call centres, waiting in time-consuming queues, and usually having to put up with providers trying to up-sell you to different products from the one’s you’re using.

First National agents recognise that you need help and we have the ideal solution. One phone call to Direct Connect will see all your utilities transferred to your new address expertly and efficiently.

Direct Connect will even let you know if there’s a better deal for you if you want them to. They keep you informed and you can spend your valuable time looking after the unpacking, the kids and getting set up. Ask us for more information.