Posted by admin on 18 June 2010
June 30th is almost here and property investors looking for a hand maximizing their refund cheque from Mr Swan might like to take a look at the ATO’s rental property info paper. It’s easy to leave the claims to your accountant but most of this info is easy to follow and one fresh idea might save you some serious dollars.
Many of us get embarrassed admitting we don’t know some of these rules. We say it’s better to ask than make an expensive mistake! Some errors we’ve seen clients make in past years: using the date of settlement of a sale when calculating CGT (it’s usually the date of the contract) or claiming travel expenses where the main purpose of the trip was a holiday (driving past the house on the way to the Port Douglas golf course mightn’t be enough!)
The ever-tricky one seems to be mistaking an improvement for a repair. There’s a ruling on the ATO website that’s worth a read if you love that kind of thing! It says works may go further than being a deductible repair if it “changes the character of the property or does more than restore the efficiency of function”.
And, as always, please talk to an accountant and don’t look to your real estate agent for tax advice!
Tags: Australian Taxation Office, Brisbane rental, capital gains tax, investment property deductions, repairs versus improvements
Posted in Brisbane landlords, property taxes and rates etc | No Comments »
Posted by Rob Honeycombe on 28 May 2010
Amongst the mile of changes to our tax system recommended by the Henry Review, there’s one that many in the property industry have dismissed out of hand. Mr Henry and Co. proposed that land tax should be paid by all property owners.
It’s controversial because it’d be a massive increase on the current land taxes that only apply once you own a minimum value of property (unimproved or UCV – see your rates notice for yours). In Queensland it’s currently $350,000 for company-owned or $600,000 for individuals (approx 2 good Brisbane houses).
But maybe the critics have been too hasty – and hear us out here! Henry suggests a simultaneous scrapping of stamp duties on the transfer of property, arguing this tax leads to inefficient use of our housing stock. A typical inner Brisbane house purchase costs the buyer $22,000 in stamp duty ($15,000 if they’re owner-occupying) and this high cost penalises the changeover of housing. Empty-nesters for example are staying in the 4 bedder long after the kids have left home and the spare bedrooms aren’t been used.
An ABS survey suggests one in six Queenslanders have been in their home for longer than 20 years. They also found 14% of us move to get a bigger place, compared to less than 3% who downsize. Addressing the housing affordability issue, Henry says less hurdles to moving will encourage us to a smaller place. Why not swap the spare bedrooms for a more modern place with other features we want?
The States will rightly be nervous of scrapping stamp duties, with more than 40% of their income coming from property transactions. But a broad land tax would be more predictable and allow better govt budgeting. Of course as real estate agents we love the idea – we’d vote for a mandatory 5 years maximum in your home!
But what do you think? Would you prefer to pay land tax or stamp duty? Please post your comments.
Tags: Australian Bureau of Statistics, Brisbane housing supply, Henry Review of tax, land tax, stamp duty Queensland, Unimproved Capital Valuation Brisbane
Posted in property taxes and rates etc | 4 Comments »
Posted by admin on 9 December 2009
A long day at work after a long week, you stagger in the door, ready for a restful weekend. You open the mail and there’s a letter from Brisbane City Council. Curious, you open it immediately. The bold font screams at you:
“NOTICE OF INTENTION TO COMMENCE PROCEEDINGS AT A MAGISTRATE’S COURT”
The not so friendly letter says you haven’t paid your Council rates on a house in Holland Park, you owe $1025, and you are to appear in Court the following Wednesday to explain yourself.
But here’s the kicker – you don’t live in Holland Park and YOU DON’T OWN A HOUSE IN HOLLAND PARK!
This true story happened to a friend last week. He’s a smart guy and knew it wasn’t his debt to pay. But even he spent a good part of his weekend worrying about his credit rating and how to resolve the issue.
Monday he called BCC. “I don’t own a house in Holland Park”. “No problem”, came the reply, “It will be someone else with the same name. Throw the letter away.”
He rightly requested a letter confirming they’d made an error. Apparently BCC (or their debt collectors) use White Pages and the electoral roll to track non-payers. So, depending on how common your name might be, there’s a chance you’ll get one of these letters sometime too.
Surely with the extensive resources of government Council can save innocent residents from misguided strong-arm tactics like this one?
Got to feel for that bloke named John Smith.
Tags: Brisbane City Council
Posted in property taxes and rates etc | No Comments »
Posted by Rob Honeycombe on 19 November 2009
Putting your place up for sale is about to get harder and will probably cost you more money, thanks to a new state government requirement.
In an “innovative and nation-leading sustainable housing policy” our Minister for Infrastructure and Planning has introduced a mandatory Sustainability Declaration. From January 1st 2010 every seller of a residential dwelling in Queensland will have to fill in a 2 page checklist.
But don’t worry, the Minister says it’s “simple” and “user-friendly”…. Have a look at the draft Sustainability Declaration for yourself.
I had a go at doing one for my house and completed just 13 of 31 questions. I didn’t know if my shower heads were WELS 3 or WELS 4 rated. And I didn’t know what the “R-value” of my ceiling insulation would be either….
To be fair we agree there needs to be a bigger focus on energy use in existing housing. But these questions are going to take sellers some time and create another hurdle to selling.
You won’t be able to advertise your place for sale until you have a Sus Dec and your agents must display it at open homes and advertise to prospective buyers that it’s available. It looks like the penalty for not doing this will be $2000 for you and $10,000 for your agent…. so if you’re thinking of selling after Christmas you might need to read up on this.
We’re guessing that most sellers will pay a building inspector to complete the form, especially in Brisbane’s inner city where many homes are rented and their investor-owners barely know the property.
Will this create a new value and ‘point of difference’ for homes with extra features and bring a higher focus to sustainability? Maybe. But given the time/cost impost on sellers, and the very small percentage that will be fully completed, we’re not sure it’s a worthwhile change at all.
The government is not even going to collect the data. That might have been useful – they could target their campaigns/incentives at getting home owners to upgrade the items that really make a difference.
We’d be interested to hear your comments…
Tags: Brisbane real estate agents, real estate advertising, selling a house Brisbane, selling an apartment Brisbane, Sustainability Declaration Queensland
Posted in Brisbane's sales market, property taxes and rates etc, real estate marketing | 3 Comments »
Posted by admin on 24 September 2009
image courtesy of News.com.au
Last night we held a seminar on Body Corporate 101. We often write in this blog about the challenges for Brisbane landlords in apartments.
I found a lot of the misunderstandings surrounding Body Corporate issues could be easily resolved with more communication, sit down conversations, casual meetings and spending the time getting educated.
One issue we as property managers could definitely argue against is the Body Corporate choice to purchase power & gas in bulk, to save the lot owners a few dollars.
The lack of knowledge around this causes much more expense to an owner when tenants can go months on end without opening an account, and the lot owner becomes responsible for a bill. Or the tenant can proceed through an entire tenancy without opening an account, or go days or weeks without gas thinking it was a maintenance issue.
We cannot take a higher bond amount to cover these types of expenses (the Tenancies Act won’t allow it) and we find the provider doesn’t simply mail reminder notices or disconnection notices to ‘the occupant’ the way Energex or Origin would do.
In a typical power supply I believe Energex can accept the loss and go to recovery methods when bills by tenants are unpaid, but for some strange reason these bulk providers are faultlessly allowed to pursue the lot owner when the tenants fail to pay.
I am sure this service will improve as time goes by, but in the meantime there are plenty of unpaid bills with no home to go to and a lot owner with extra money to outlay.
Tags: body corporate issues Queensland, Brisbane property manager, rental bond, tenancy disputes
Posted in Brisbane landlords, Brisbane's rental market, property taxes and rates etc | No Comments »
Posted by admin on 21 August 2009
Are first home buyers still buying? It’s the most common question people are asking us at the moment.
In May it seemed like they”d run out of steam and we might have seen the last rush. The maroon line on the graph below shows the total grants to Queenslanders each month and you’ll see that June kicked back up again. Maybe with more job confidence, buyers lined up for their $14,000 from the government in bigger numbers than ever. The First Home Owners Grant has cost taxpayers $13billion since the October introduction of the boost.
With reasonably tough bank criteria and some conservative valuations going on, we’re surprised the run has continued as long as it has. The grant has pulled forward an enormous amount of first home demand. The graph does show the lines flattening, Queensland more so than other states, and the upcoming release of July stats will give us an update on their appetite.
Our view from the market is that sales volumes are steady as investors are taking up the slack, with first home buyers slowly easing in number.
Tags: first home buyers, First Home Owners Boost, home buyers Brisbane
Posted in Brisbane's sales market, property taxes and rates etc | No Comments »
Posted by admin on 4 June 2009
Northbridge Apartments
The massive BCC rates rises are here to stay, following a ruling by the Supreme Court that Council’s decision to increase rates was within its power. Many South Brisbane apartment owners believe council is not taking into consideration the fact there are often 180 or more residents per building and unit owners also pay excessive body corporate fees. It’s a fair comment. With the average large building lots equivalent to 2 or 3 suburban home sites (or 2 or 3 rate payers!), why does council expect apartment owners to subsidize utilities used mainly by suburban home owners?
Here are some examples (courtesy of today’s City South News): Castlebar Cove, Kangaroo Point up $361.60/quarter; Dockside Hotel Kangaroo Point up $365.33/quarter; River Plaza, South Brisbane up $166.24/quarter
Tags: Brisbane City Council, Castlebar Cove Kangaroo Point Brisbane, Dockside Kangaroo Point Brisbane, Kangaroo Point Brisbane, River Plaza South Bank Brisbane
Posted in South Brisbane and South Bank, property taxes and rates etc | No Comments »
Posted by Rob Honeycombe on 13 May 2009
first home buying
Good news for those first home buyers still saving up their pennies, with last night’s Budget extending the current Boost to the First Home Owners Grant. Eligible buyers get $14,000 toward their purchase ($21,000 for new property) and that incentive’s now been extended to September 30th 2009.
From October 1st to december 31st it’ll drop back to $10,500 and $14,000 respectively, then from Jan 1st 2010 we’re back to the long-running Grant of $7,000 only.
There’s been a real run of first home buyer sales recently and this extension will give them more time, taking some of the pressure off their decision-making.
With such a strong ‘pull-forward’ of demand having already occurred it’s fair to ask how many first time buyers are left? And more importantly, how many that can get a loan in the new credit world we live in?
Tags: first home buyers, First Home Owners Boost
Posted in property taxes and rates etc, trends in Brisbane property | No Comments »
Posted by Rob Honeycombe on 8 April 2009
So the Reserve Bank dropped official rates yesterday and we now have a cash rate of 3%, the lowest since 1960. What’s next from the government for property? We all know confidence remains low but (while not wanting to talk things up) the worst may be over for real estate. In March the major property web portals had another big jump in traffic. Almost 5 million visitors went to realestate.com.au, up 11% on the same time last year.
Some markets (but not all) are witnessing more sales. In making the rate cut announcement the Reserve Bank’s Governor confirmed there’s been more activity. “Demand for credit is weak overall, though credit for owner‑occupied housing is picking up”, he said. The chatter about the market right now is getting more positive. The big surge of course has been from first home buyers, keen to take up the $7000 boost to the usual grants. In the last quarter of 2008 the govt handed out 7,659 FHOG giftbags, up a whopping 39% on the previous 3 months. And we can’t help wondering if Swan and Rudd will feel that when the boost offer expires on June 30th it’ll be time to shift their support to another market.
Reserve Bank deputy Ric Battellino might agree. He last week told a Brisbane seminar the grant’s benefits could quickly be eroded. “By all accounts the bottom end of the housing market has picked up a lot in recent times and it doesn’t take long for the average house price to increase by $20,000 and leave the homebuyers no better off than they were before.” Market analyst Michael Matusik is opposed to the grant. “The FHOG is inflationary, distorts the normal cycle and creates few new homes over the longer term.” He argues in a time of undersupply we should have incentives to build new housing.
Some commentators worry that removing the first home boost will punish the lower end of the market. But our view is there’s a whole bunch of forgotten buyers on the sidelines getting closer to acting. Investors might just be the next busy audience as they recognise the opportunities on offer.
How should the government support the housing market? We’d love to hear your comments…
Tags: Brisbane home prices, Brisbane housing supply, first home buyers, interest rates, Michael Matusik, Reserve Bank, www.realestate.com.au
Posted in Brisbane's sales market, property taxes and rates etc, trends in Brisbane property | 1 Comment »
Posted by Rob Honeycombe on 18 March 2009
If you’re going to do a thorough review of Australia’s taxation system then everything’s got to be reconsidered. So with Treasury head Ken Henry’s rummaging around in the tax-breaks closet we weren’t surprised to hear negative gearing again pulled out for discussion. One of our landlord clients rang us concerned, online investor blogs have started a nervous chatter and the weekend’s Courier Mail headlined with “Negative gearing attacked for driving up property prices”.
What is it? The ATO says “A rental property is negatively geared if it is purchased with the assistance of borrowed funds and the net rental income, after deducting other expenses, is less than the interest on the borrowings“. So it costs more for you to own the property than a tenant will cover with rent payments.
Okay so we’re real estate agents, we have a vested interest in encouraging property investment. But so does the 32% of Australia’s population that rents. Who will provide their housing if we discourage investors?
A recent get-together of unions, welfare reps, conservationists and consumer groups discussed the Henry Review. The group, calling themselves “Community Tax Forum”, says Australia is a low taxing nation. Blaming negative gearing for high home prices their spokesperson said, “There’s no doubt we’ve got the most generous system in the world for rental investors”. Maybe they have images running through their heads of wealthy old landlords banging on poor pensioners’ doors demanding more rent…
The Real Estate Institute prepared a paper on the topic as far back as June 2008. Their findings: 72% of property investors using negative gearing earn $63,000pa or less. Just 11% earn over $95,000pa. Most are Mum and Dad investors building their retirement nest eggs. The Property Council says negative gearing costs the tax man $2billion a year, but taxes on property generate $29billion.
Of course Paul Keating had a crack at this tax break in July 1985, limiting a property investor’s interest deduction to that property – that is, not letting them claim the loss against other income. Either people forget too easily or they choose to ignore history’s lessons. Following the 1985 change new housing construction plummeted and rents rose 32% in Brisbane, 37% nationally. By 1987 Mr Keating had backflipped and rental supply eventually caught back up to demand.
Property investments don’t stay ‘negative’ as rents rise and principals are repaid, and at some point they’re sold with capital gains tax incurred by the investor. So in time the Treasurer will get his pound of flesh. And in the meantime our nation’s tenants can enjoy more reasonable rents.
Despite our role as real estate agents we would welcome your opinion! Do you agree with tax breaks for property investors?
Tags: Australian Taxation Office, Brisbane housing affordability, Brisbane rents, negative gearing, taxation
Posted in Brisbane landlords, Brisbane's rental market, property taxes and rates etc | 3 Comments »
