Uncertainty abounds!

As we approach the election, we are finding the market a bit more tentative than last month. We are now seeing auctions whereby there might be only 1 or 2 bidders rather than the 3 to 4 we were becoming familiar with earlier in the year. This is presenting some good opportunities to buyers that are willing to put their foot forward.

Who wins the election will certainly have a big longer term impact on the property market. If Liberal wins, you can expect the status quo and certainty will be returned to the market. If Labor win, we will see some changes to negative gearing that could adversely impact the property market. In this instance though there could be a short term boost to the market if the changes are introduced in July 2017. This leaves 12 months for people to buy property to negatively gear as at this stage, the changes will not be applied retrospectively. Meaning anyone that owns a negatively geared property prior to the introduction of the changes can continue to claim the tax deductions until they sell. This could also impact the future supply of established properties as investors are unlikely to sell their properties unless they have to.

We strongly support the industry view not to touch negatively gearing. This has been well expressed by the Real Estate Institute of Victoria which we have included in this month’s newsletter. We also take a look at a couple of recent purchases and our tip of the month is all about maximising depreciation benefits as we approach the end of the financial year.

Have a great month!

Leigh McConnon 
Managing Director

REIV - Negative Gearing Affects Everyone

NEGATIVE GEARING IS NOT A PERK OF “THE RICH.” IT AFFECTS EVERYONE. IF THE PLAN TO GET RID OF IT SUCCEEDS, IT WILL BE A DISASTER FOR OUR FRAGILE ECONOMY. WHY WOULD WE RISK THAT?

In recent months, a policy to get rid of negative gearing on existing residential property and increase capital gains tax has been all over the media.

This policy – if ever adopted – directly affects the millions of Australians who own any property, whether it’s an investment or their own home. It also affects the 18 million Australians who have a stake in property through their superannuation funds.

But as well as falling house prices, the knock-on effects will see jobs destroyed and government revenues fall, and may even send the Australian economy into recession.

The REIV have established a website www.negativegearingaffectsyou.com .This site is part of a campaign by real estate groups across the country who have united with the Real Estate Institute of Australia to make Australians aware of these disastrous consequences. Our industry participants pride themselves on being apolitical, but this time, the issue is far too important not to speak out.

Yes, this policy will affect the property industry, which is now the biggest industry in Australia. Such a policy would rip billions of dollars out of our sector at a stroke. But it’s obvious that taking billions of dollars out of the economy all at once is a recipe for disaster for all of us.

Property Management

We have made a significant investment in our property management division over the last few years and would love the opportunity to manage yours.

In addition to the standard services we also offer a value added service as a Buyers Advocate business, by providing a 6 monthly report of sales in the area and advice on what you can do to increase the value of your investment. We can also offer a free consultation to discuss your portfolio every 12 months or on a needs basis. This is completely independent as opposed to the discussions you may have with an existing property manager as they will often pass you to a sales person who would love to sell your property, so any advice is often not very impartial.

If you would like more information on our property management services please contact Caroline Lichtenberg, by phone or by email. Phone 0477 663 325 or email to caroline@buyersadvocate.com.au.

Buys of the Month

We have had a very busy month securing a large number of properties for our clients. This has been driven by the uncertainty in the market. While others are sitting on their hands we are actively out there securing some great quality properties. We have given a couple of examples below.

Newport – 5 year old 4 bedroom family home purchased for $1M

After two years searching for their home with no success, our clients came to Buyer’s Advocate asking for our input in solving their issues.  After a smooth educational phase, which forms part of our service, we found our client the perfect property; a stand out in the street. With the un-usual Auction time of a Thursday evening, an out of area agent and a majority first home-buyer crowd, the stage was set for a cold but successful Auction. With an opening bid from Bidder 1 of $810,000, Buyers Advocate jumped the bidding to $850,000 to get things really moving, in the cold weather. Backwards and forwards with 4 others entering the fold at varying levels the half time break was called at $975,000.  Based on the bidding increments and the bulk of the bidders in play, giving up so soon, it was established by Buyers Advocate to our client, that the big barrier will be the $1million mark for most bidders here.  At $975k on Bidder 1’s bid Buyers Advocate took the rises to in $5k increments landing on a bid from Buyers Advocate at $1million. After a long stretch out, the out of area Agent knocked it down, with Buyers Advocate securing the property for our client and our clients were understandably “over the moon”.

Preston - Home purchased prior to auction for $710k

After inspecting the property on the Wednesday it was the view of Buyers Advocate that whilst it may be worth the client inspecting, if only to give them an idea of value in that area of the suburb on what prices are being achieved, it was also advised by Buyers Advocate, that under Auction conditions, the property may actually go over their pre-determined budget. The client inspected the property on the Thursday night and fell in love with it.  Advising Buyers Advocate of this, it was then up to Buyers Advocate to determine the best way moving forward of securing the property, with minimal fuss and minimal competition from other buyers.  After a lengthy conversation with the selling Agent on Friday morning and a transparent process being revealed as the course of attack, throughout the buying process, Buyers Advocate made an offer to the selling Agent prior to Auction.  By 5pm Friday night the deal was wrapped up, with the client of Buyers Advocate, no longer needing to attend open for inspections and the like.

Tax Depreciation saves you money

A Tax Depreciation Schedule is a document prepared by an ATO compliant Quantity Surveyor that outlines the depreciation allowances a property investor is entitled, and enables your accountant to maximise tax benefits accordingly.

Put simply, if you own an investment property you are entitled to claim property depreciations and allowances on all eligible capital asset and plant items for that property.

The importance of having a Tax Depreciation Schedule…
Thousands of dollars in taxable deductions are available, and a common misconception is that depreciation schedules are restricted to new properties. Not so… all buildings irrespective of age attract depreciation allowances, including any renovations and improvements made to the property.
Peter Setford of ESSENTIAL Property Inspections, in liaison with Taxshield Quantity Surveyors, can provide a depreciation schedule on your investment property within 10 days of enquiry.

With nearly 10 years experience, Peter, with Taxshield, has provided many, many property investors with schedules saving them many thousands of dollars in taxable deductions. Make sure you are getting maximum return on your investment property and have a Depreciation Schedule in place.

For more information contact our office