Product Newsletter 1st August

vacent investment site in Ipswich before the cement slab is poured (right)

BUY NOW – DON’T REGRET LATER


Here we are at what I’ll call a “crossroads moment”.

With the good news coming out of America that their housing bust looks like it’s coming to an end, and the expectation that interest rates in Australia are peaking, it’s now time to enhance – or commence – your property investment portfolio.

The National Australia Bank said on 30 July that it expects that the Reserve Bank of Australia to start cutting rates from early next year - that's only four months away! - from the current rate of 7.25% and slash a full 1.25% over the course of 2009.

Don’t come back to me in ten years and say “You were right. When we saw that interest rates were peaking, we should have bought late in 2008!”

If you me to assist you explore your options, contact me – Bernard Kelly - anytime on admin@retirelaughing.com



HOUSING MARKET TO EXPLODE: ANZ BANK

THE ANZ Bank says the growing housing shortage is setting Australia up for the "mother of all" housing booms.

New home building figures showing slumping building approvals have sparked fears of a price and rent explosion that will price even more prospective buyers out of the market.







The ANZ's senior economist, Paul Braddick, said on 3 July that Australia faced a critical and potentially chronic shortage of housing.







"A growing housing shortage is setting the scene for the mother of all housing booms," Mr Braddick said.







"Demand has accelerated and rising immigration, both permanent and temporary, shows no sign of abating. Meanwhile, rising interest rates continue to stymie any building recovery.







"Underlying housing demand is already outstripping new supply, and the gap is set to widen sharply, driving pent-up housing demand to record levels," he said.



PROPERTY INVESTMENT AND TAX TIME

Property investment remains one of the most popular ways to create wealth for the ordinary person, but for uneducated investors it can be easy to make mistakes at tax time.

The Australian Taxation Office says it has identified a number of common mistakes in the tax returns of rental property owners, and its list includes:







Construction costs are a big issue, as depreciation of capital works deduction at the rate of 2.5 per cent a year is permitted. So the structure is completely written off over 40 years.







However, the land on which a rental property is constructed cannot be claimed as a depreciating asset for tax purposes.







Deductions can also be claimed for the decline in value of some types of depreciating assets in residential rental properties, for example curtains, blinds, dishwashers, refrigerators, stoves, air conditioning units, television sets and hot water systems. You may be able to write off most of these over five years.







However other areas where a tax deduction cannot be claimed include:

· conveyancing costs, which form part of the cost base.

· travel expenses where the main purpose of the trip is a holiday and the property inspection is incidental to that.
· expenses relating to private use of the property.
· interest on any private portion of a loan that is used for both investing and private purposes.


To ensure that you maximise your deductions, you need a Quantity Surveyor’s Report at the time of acquisition, and a specialist property accountant every year.

If you need assist in locating either, feel free to contact me – Bernard Kelly - anytime at admin@retirelaughing.com




PROPERTY INVESTORS: UNSUNG HEROES

In the current issue of “Your Investment Property” Bill Zheng, CEO of Investors Direct, said that property investors contribute 23% of the 7.5 million residential properties to the housing market, where the public housing system only provides around 6%.




"Without property investors, many thousands of Australians who rent would have nowhere to live," he said.




"Property investors also contribute to the health of the overall Australian economy by creating jobs in property related industries, such as construction, building material supplies, finance, legal, accounting, etc.




“Historically, around one-third of the residential mortgages in Australia are taken out by property investors for investment purposes. In the 12 months to March 2008 it was 32%.




"Only 6% of the Australian population are property investors, and this small group of people tends to be less understood by the general public in comparison to homebuyers. Property investors are, in fact, a very unique group who have decided to proactively take control of their own financial future, instead of relying on government assistance when they retire.




"Being a property investor is challenging. It takes strength of character. As Australian residential properties don't have very high yields in general, property investors usually need to be disciplined with their cash flow.




"Another major difficulty property investors need to confront and overcome is the need to take on more debt. Taking on debt is one of the most effective ways to create wealth through properties. It takes a person who is financially astute, who has courage and determination to do so.




"Property investors are also disciplined and focused. Compared to homeowners, property investors also need to spend a lot more time educating themselves in taxation, asset protection, finance, property selection, risk management and people skills, etc. Simply falling in love with a property isn't quite enough to make you an effective investor.




"Many property investors don't give themselves enough credit for what they do - the general public certainly doesn't.

If you want to belong to that elite group owning 23% of Australia’s residential properties, feel free to contact me – Bernard Kelly - anytime at admin@retirelaughing.com