3rd November 2011

What Does The RBA Interest Rate Cut Mean For You?

On Tuesday, Melbourne Cup Day, the RBA cut interest rates by 0.25% to 4.5%, the first cut in official rates since April 2009 and the 6th year in a row it has moved rates on Cup Day, traditionally a meeting when rates are left alone.  I’m not going to bore you with the reasons for this cut, you can go straight to the Glenn Stevens RBA media release for this.

As lenders cut their rates in line with the official rates, those on variable rates should start to see some savings in the order of $250/year or $20/month per $100,000 borrowed.  As was widely reported in the media, CBA and Westpac moved to cut 0.25% from their rates effective a few days after the official rate cut and NAB was criticised for only cutting 0.20% (effective Nov 7).  Despite this, NAB still has the lowest SVR of the big four.  Are you concerned you’re not getting the best rate at your bank?  Are you thinking of buying a property, but have been previously told you can’t borrow enough?  The drop in rates and the prospect of further cuts may increase your borrowing capacity.  Contact me and I’ll ask one of my mortgage professionals to assess your situation for you.

20th October 2011

ATO Changes to SMSF Rules a Positive Step for Property Investing

Over a third of Australian superannuation funds are held within Self Managed Superannuation Funds (SMSF), with the average size of each fund about $960,000.  Legislative changes in 2007 have allowed SMSF owners much more flexibility in how they invest their money, including buying residential property.

Buying a property within your SMSF has just become more attractive with the ATO releasing a draft ruling allowing funds from your SMSF to be used to improve a property and conduct repairs to recently acquired property.  This will ultimately have the effect of broadening the the available properties that you can purchase within SMSF as the previous restriction essentially limited purchases to new properties that didn’t require any modification to offer a good rental return.  Find more information on the ATO ruling here>>. Download ruling SMSFR 2011/D1  from the ATO.

One commentator suggests these changes will have a major positive effect on the rental availability and affordability as investors  increasingly enter the property market as part of their SMSF investment strategy.

If you’d like more information on these changes and how to use a SMSF to improve your post retirement financial position, drop me a line!

5th August 2011

New Transfer Duties in Qld and the $10,000 Building Boost Grant: Should you buy property now?

There were significant changes in transfer stamp duties introduced from 1 August 2011 in Queensland, along with the introduction of a $10,000 building boost grant for Queensland.

Transfer stamp duty is paid to the government when a property is bought, or the title is transferred to a third party.  Currently, first home buyers are eligible for a full concession if the purchase price is below $505,000. The only change here is an increase in the concession threshold to purchases below $510,000 after 1 August.  The major change after 1 August is that home owners will no longer be eligible for a concession and investors will pay a lower rate. I’ll detail the changes with two examples within a price range expected in the current market.

Contracts signed from 1 August inclusive will be subject to the new rates.

The kicker for those buying a new home or building is the $10,000 will be available on contracts signed from 1 August only.  A double win for investors buying new, as the transfer duty drops and they get the boost.

Also, from 1 August eligible first home buyers building a new home still have access to the $7,000 FHOG and the $10,000 boost!

What constitutes a new building?

Obviously, a contract you enter into to build or buy off the plan results in a new building, which qualifies.  A vacant house being sold by a builder qualifies as long as no one has lived in it.  Some scenarios such as those involving extensive renovations or removal houses would need to be assessed by Office of State Revenue, but generally, an extensively renovated house that meets the other conditions, is eligible.  Please contact the OSR on 1300 300 734 for clarification.

Contract dates

To be eligible for the Building Boost Grant, a contract needs to be signed for the purchase of a new property between 1 August 2011 and 31 January 2012, no ifs or buts, no re-written contracts!  If you’re building, a construction contract must be signed within the above dates, building commenced within 26 weeks of the contract date AND building must be completed within 18 months of the contract date.  Someone must take residence at the address within 12 months of ownership.  Off-the-plan constructions need to be completed by 31 July 2013.

Remember, the boost ends on 31 January 2012.

Property value limits

The value of the property, including land must be less than $600,000 to qualify.

Can I claim more than one $10,000 grant?

Yes! Build or buy as many new houses, duplexes or townhouses as you can. The grant can only be claimed once for each property (i.e. not by the builder and the buyer).

Details of changes in stamp duty, boost and FFHOG grants and abolishment of the ambulance levy can be found here>>

FAQS on contract dates, occupancy requirements and eligibility can be found here>>

If you would like help calculating the effect of stamp duty changes and the boost grant on your next property purchase, give me a call.

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