Are you interested in investing in property?
Want all of the tax benefits of negative gearing but don't want the cashflow shortfall associated with negative gearing?
Already have a negatively geared property and would like to reduce the cashflow shortfall?
There is a solution.
Negatively geared cash flow positive rental properties.
The Federal Government introduced the National Rental Affordability Scheme (NRAS) which currently pays $9,981 per year indexed to CPI as a tax offset to you if you invest in an NRAS approved property investment. The NRAS payment is paid to you each year for 10 years or until you opt out of the scheme. The payment is tax free!
NRAS is only for brand new NRAS approved properties. It is not social housing, Suitable tenants must meet strict rental criteria and be employed, and is aimed at key workers like emergency services personnel, hospital staff and retail employees. NRAS properties include apartments, townhouses and houses in inner and outer suburbs and in a range of price categories.
The only proviso to obtain the NRAS payment is that you charge 80% of the market rent rather than the full market rent on the property. However, despite the reduction in rent you are still way ahead of a non-NRAS property and will be cashflow positive!
Here is an example of the ongoing costs of a non NRAS property compared with an NRAS property.
Assumptions: Property costing $350,000, rental $360pw
Non-NRAS NRAS
Rent $18,720 $14,976
Less: Rental Expenses
Interest 100% 6.5% $22,750 $22,750
Management $ 2,059 $ 2,645
Depreciation $ 7,000 $ 7,000
Rates/Insurance etc $ 2,500 $ 2,500
Negative gearing loss ($15,589) ($19,919)
Tax refund at 31.5% $ 4,910 $ 6,274
NRAS Incentive $ 9,981
Nett cashflow ($3,679) Negative $3,336 Positive
Difference between NRAS and non-NRAS is $7,015.
NRAS property can be purchased inside or outside of superannuation.
If you want to know more on how the NRAS scheme would affect your personal situation, please do not hesitate to contact this office.
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