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									                                                     May/June 20 0 8            ne WSLe T T eR

                                  Housing affordability is never far from the news
                                  headlines. In these times of economic uncertainty,
                                  buying, owning and selling a home presents some
                                  unique challenges.                                                              Through Super

                                  In this issue we look at these challenges, including the
                                  factors that influence housing affordability and what
                                  the government is doing to help more people into                                going, going, gone
                                  home ownership.                                                                 …aT The right price
If you decide it’s the right time to sell, we provide some tips for making your home
the best on the block in our article ‘Going, Going, Gone … at the right price’.
                                                                                                                  The price
We also help property investors maximise their tax deductions in our last article
‘Tax Returns for Investors’.                                                                                      of housing

every cloud has a silver lining, and we hope these articles demonstrate there is
hope amidst the housing gloom. We urge you to contact us should you need
personal advice about the best course of action for your financial situation.                                      tax returns
                                                                                                                   for inveSTorS
enjoy this newsletter and feel free to share it with family and friends

        Borrow Through Super
Investing your superannuation in direct             have up until now primarily focused on
property could now be an option in                  the share market or indirectly invested in
your retirement strategy, thanks to                 property via property funds or trusts.
recent changes to the laws governing
self-managed superannuation funds.                  as its name suggests, a self-managed super
                                                    fund gives you control of your super destiny,
The changes provide an opportunity                  but its complex rules can be daunting to
for a self managed super fund (SMSF) to             the uninitiated. expert advice is necessary
borrow money to acquire a beneficial                and will help facilitate a smooth set-up,
interest in an asset, i.e., property. Otherwise     as well as ensure any borrowing and
known as gearing, it is a wealth creation           investment falls within the rules of the fund.
strategy that enables you to invest more
money than you could if you had to                  It is expected the new opportunity to
rely solely on your own resources.                  borrow will entice more people away from
                                                    employee or industry funds in favour of
Prior to this reform, property could be             setting up a self-managed super fund.
purchased within a super fund but it
usually had to be bought outright as the            If you are considering any type of borrowing
fund was not allowed to borrow a portion            for investment purposes , we are happy to
of the total cost. For this reason, many            provide information and referrals to other
investors with self-managed super funds             professionals to help get you started.

                                                                   We are members of the Mortgage & Finance association of australia (MFaa), the
                                                                   peak industry body.
                                                                   all members are bound by a strict code of ethics to ensure the highest levels of
                                                                   service, integrity and professionalism.
going, going, gone…
At the Right Price
When selling your home, the                 To gain the maximum interest in your
difference between making a                 home, stylists advise it should be
disappointing return or earning a tidy      spotlessly clean, full of light, free of
fortune can be as simple as knowing         clutter and smelling good. Some even
how to stand out from the crowd.            recommend displaying vases of fresh
                                            flowers around your home or baking a
Property figures show the number            batch of cookies before your open house!
of homes being put up for sale is on
the increase, yet potential buyers are
staying away from the market due to         2. Find the right price
concerns about rising interest rates.
                                            It is said that a mispriced home often
With more properties on the market and      sits on the market longer and eventually
fewer buyers, it is more important than     sells for less than a similar, correctly             3. Choose an
ever to outshine your competition.          priced home. When finding out how
Here’s a few suggestions:                   much your home is worth, do your own                 expert agent
                                            research as well as asking for a valuation
                                            from a number of real estate agents.                 you want a real estate agent
1. Make a good                                                                                   who will work hard to sell your
                                            Online services like australian Property             home, preferably for more
first impression                            Monitors (www. or Residex                than the market price!
                                            ( are a great resource
your home needs to make a                   for up-to-date property information. For             Rather than simply choosing
prospective buyer feel confident            a fee you can receive property reports               the agent who tells you your
and excited right from the start. This      which will help you evaluate how much                property is worth the highest
means repairing whatever you can            your home is worth, how much it will be              price, look for their ability to
both inside and out, from chipped           worth in 12 months time and the sales                negotiate and work the best sale.
paint and wandering weeds to dirty          history of your street and suburb.
windows and dripping taps.                                                                       When it comes to not giving
                                            you can also pay professional property               your property away too early,
Cast a critical eye over your home and      valuers to come to your property and                 experience and negotiation skills
make a list of ways you can smarten         give you an independent valuation.                   are a must. a sound knowledge
it up. ask a friend for their objective     The australian Valuers Institute                     of the local area, a track record
suggestions or hire a home stylist          (                        of selling and a good marketing
to help with the presentation.              can recommend a valuer.                              program are essential criteria.

                                                           R for Rich Life                           by Julie Davey

                                                           r for rich Life is a bright and colourful book designed to help children
                                                           learn how to get what they want from life. it shows readers how to get
                                                           ‘rich’ in every sense of the word. it asks kids to work out what ‘richness’
                                                           means to them: relationships, health, hobbies, a new bike - and then
                                                           helps them develop positive mindsets so they can move towards their
                                                           goals. The book presents financial matters such as saving, investing and
                                                           budgeting in fun ways that children will relate to, while providing them
                                                           with skills that go far beyond the monetary. recommended for 10 to 14
                                                           year olds or younger children with parents guidance.
                                 by Julie Davey
                                  RRP $19.95               it is available in bookstores or online at

                 MaY/June 20 08           ne WSLe T Ter
   Did you know?                                                                                  SOLD
    A number of housing affordability                                             For new home buyers, there is a housing
    measures have been introduced                                                 affordability fund designed to help
    by the Rudd government:                                                       with infrastructure and council costs.

               For investors, there is a new national                             For aspiring home buyers, there is a $850
               Rent affordability Scheme that funds                               million policy for low-tax First Home Saver
               tax incentives to build up to 100,000                              accounts to help you save for a deposit.
               low-cost rental properties.

                                                                                                     Australia’s most expensive Capital City

   The Price
   of Housing
Buying a home in an Australian city         will cost 8.6 times the average annual           the supply of land. By easing up on
could cost you more than it does            household income. not far behind is              land-zoning regulations that restrain
in London or New York. That’s the           Perth (7.6), followed by Melbourne (7.3),        growth on the outer fringe of our
surprising finding of a recent study        adelaide (6.5), Brisbane (6.4), Hobart           cities, it is believed that the increased
of international housing affordability      (6.3), Darwin (5.9) and Canberra (5.3).          supply will cause house prices to fall.
by American public policy consultancy,      Mandurah in Western australia receives the       Others argue that heightened demand is
Demographia. From the 227 cities            distinction of australia’s most expensive        to blame. a decade of low interest rates
throughout the world surveyed,              urban area, where houses cost 9.5 times          is thought to have played an important
18 Australian cities were ranked            the average annual household income.             role in fueling demand for housing. Other
in the top 50 of severely                   Queensland’s Sunshine Coast rates not            factors like the halving of capital gains tax,
unaffordable markets.                       much better at 9.3, and the Gold Coast           economic growth and strong immigration
                                            ties with Sydney at 8.6 times the average        levels are thought to have encouraged
The increase in house prices in australia   household income, although the QLD               more people into home ownership.
has pushed housing affordability to an      data may be distorted by the large               Whatever the reason for australia’s
all time low. Demographia rated urban       number of retirees who have relocated            housing affordability crisis, it is agreed
markets as ‘severely unaffordable’ when     to these areas over recent years.                there are no magic bullet solutions. The
house prices were more than five times                                                       Rudd government has announced a
the household income. In australia,         The Demographia study and                        number of housing affordability measures
housing prices were found to be 6.3 times   those like it leave little doubt that            (see above), which it is hoped will go
annual household earnings, compared         australia is in the midst of a housing           some way towards easing the crisis.
with 5.5 for the uK and 3.6 for the uS.     affordability crisis. What is not so clear
                                            is why house prices are so high.                 Please call our office if you need any
Sydney receives the dubious honour          On one side of the debate are those              further information on the government
of being australia’s most expensive         that argue high prices are the result            schemes available. Our door is always
capital city, where buying a home           of government policies restricting               open to help our valued clients like you.

                                                                   MaY/June 20 08             ne WSLe T Ter
Tax Returns
for Investors
With tax return time getting closer, there                      such as dishwashers,
is no better time to tidy up the office,                        carpets and furniture.
organise all your receipts and start looking                    new items will have a
for all your allowable deductions for your                      greater impact on your
investment property. If you are due a tax                       tax claim. Older items
refund getting organised before the end                         may have already used
of June may mean you could have your tax                        up their "effective life"
cheque in your hand before the end of July.                     and not be eligible for a tax claim.
                                                                you may want to consider employing a
The most obvious tax deduction is the                           property surveyor to prepare a depreciation
interest on your investment loan. This                          schedule that your accountant will use each
can be deducted in the year it is paid.                         year to maximise your depreciation claims.
Other expenses that can be claimed in the                       The largest and most important component
same year as paid include council rates,                        of the depreciation schedule is the historical    Would you like to see what the changes
insurance, renovation costs and repairs.                        cost of the construction of the property. The
Be aware the common error of claiming                           construction cost typically comprises 90%
                                                                                                                  to your mortgage payments can or will
as a deduction a repair that is actually an                     of the tax savings available. For residential      be as interest rates move up? Just visit
improvement to the property. a repair must                      investment properties, construction must and
directly relate to damage that occurred                         have commenced on or after July 18, 1985.         click on Mortgage Tools where you can
as a result of renting out your property.                                                                             access the following calculators:
Replacing a part of a fence damaged in a                        Where construction commenced
                                                                                                                          Basic Loan Repayments
storm is classified as a repair, for instance,                  between 18 July, 1985 and 15 September,
but replacing the whole fence is seen                           1987 depreciation is applied at 4% of                  Complete Loan Comparison
as an improvement to the property.                              construction costs and is claimable for 25                   Extra Repayments
                                                                years. Where construction commenced                         How Long to Repay?
While property improvements, alterations or                     after 15 September, 1987 depreciation is                 How Much Can I Borrow?
extensions cannot be claimed as immediate                       applied at 2.5% of construction costs and                  Lump Sum Payments
deductions, you can still make your money                       is claimable for 40 years. In both cases
back by claiming them as capital works                          substantial tax savings are possible.
                                                                                                                            P & I / Interest Only
depreciation. This involves writing off                         Guidance about what you can and                                 Stamp Duty
the cost of the item over a set number of                       can’t claim can also be found in the                              Split Loan
years – the effective life of the asset.                        australian Tax Office free guide ‘Rental               Reverse Mortgage and more.
you can also claim depreciation of items                        Properties’ at                   If you need any further assistance please
                                                                                                                        contact us on 03 9832 0802
DISCLaIMeR: This newsletter is intended to provide general news and information only.
Readers should rely on their own enquiries before making any decisions touching their own interests.
Please do not rely on any part of this newsletter as a substitute for specific legal or financial advise.

                                                            Mortgage Simplicity
                                                            23 Milton Parade
                                                            Malvern Vic 3144

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