Home Builders Bonus
If you’ve been holding back waiting for the right time to purchase a new property or build a new home, then this could be it!
One of the biggest costs when buying real estate is Government Stamp Duty. Not anymore… thanks to the Home Builders Bonus Scheme introduced by the NSW Government.
The best part about this Scheme is that it’s open to everyone, including Investors who purchase a new house or apartment. The purchase can be made in your own name, or in the name of any entity, including a Company or Trust structure.
You will pay ZERO Stamp Duty for new homes up to $600,000 purchase price, or $400,000 for vacant land. For homes already under construction, a 25% discount will be applied.
As an investor, there are innumerable benefits of buying ‘new property’ whether it be an ‘off-the-plan’ apartment or vacant land so long as construction of a house commences within 26 weeks of the land settlement date.
A new home is deemed to be a home that has not been previously occupied or sold as a place of residence, and includes a home that is a substantially renovated home.
To be eligible, you will need to have entered into the contract prior to 1 July 2012 (that’s less than 6 months away) and apply for the Home Builders Bonus exemption within 3 months of exchanging the contract.
If you have already entered into a contract of this nature, you may already be eligible so long as you entered into the contract after 1 July 2010 and apply within 3 months of the date of that contract.
Home Builders Bonus Fact Sheet
Home Builders Bonus_Application Form
For further information, check out the FAQ’s
If you have any questions contact us here
The Economy and the Year Ahead
With so many mixed messages going around about the state of the economy, we thought it was time to look at what the statistics tell us. Here’s a round-up of the latest research on the Australian property market: (sourced from SQM Research and Genworth’s Home Grown Mortgage Industry Perspectives report)
- Australians remain better placed to cope with their debt levels than borrowers in many other countries. 45% of Australian borrowers are overpaying their mortgage, compared to an eight-country average of 26% (across Canada, India, Ireland, Italy, Mexico, the UK and the US).
- The typical borrower in 2012 is expected to be refinancers and upgraders, with first homebuyers and investors remaining cautious.
- In the past year, WA has seen the largest growth in lending, then QLD, followed by VIC and NSW, with SA and TAS having seen a drop in home lending.
- Of the capital cities, Sydney stands out as a being on track for house price growth of between zero and 4 per cent by the end of 2012, factoring in no interest rate change.
The statistics show us it’s not all doom and gloom, with the health of the property market varying from suburb-to-suburb and state-to-state.
Our housing markets ended 2011 in a better position to where they started and John Edwards from Residex is confident that the year ahead will be better for residential property owners compared to last year.
Australians are much better placed than many other people in the world and the adjustment period we have recently seen, with a clear upswing in our markets in the last few months, means that there is a reasonable chance that our markets will advance positively, albeit by a relatively small amount, in the current year.
Additionally, in this situation there will be bargains for the astute house hunter along with quality growth in many suburbs.
The last year has seen many homebuyers and investors sit on the sidelines and property prices reduce with most concerned about the global financial markets. Although some industry experts predicted a property meltdown, our markets have remained intact and many savvy buyers have even been rewarded with good buying.
In these times, we continue to reinforce the importance of doing your research to buy good quality property that will stand the test of time. Nobody can predict the future markets with exact precision; however you can be sure to weather market movements with quality property.
As your mortgage broker we would be happy to speak with you about any lending issues and or property decisions you may be concerned about for the coming year.
Rates cut before Christmas
At its meeting on Tuesday, the Board decided to lower the cash rate by 25 basis points to 4.25 per cent, effective 7 December 2011.
There could be more rate cuts to come depending on the problematic situation in Europe . Futures markets have priced in a drop in official rates to a low of 3.25 per cent by May.
Old versus New
If there’s one topic property investors rarely agree on, it’s what makes a better investment: old or new?
Proponents of buying ‘old’ argue that established dwellings are typically more affordable and can be renovated to create equity, whereas those buying ‘new’ argue that this is outperformed by the tax incentives that new properties deliver.
Confused? Here are the arguments for both sides of the debate, but remember there’s no ‘right or wrong’ answer, regardless of which corner you stand in! Old and new properties both have distinct, unique advantages and what counts as an investor is that your decision matches your individual strategy and goals.
Reasons to buy ‘New’
1. Tax depreciation
If you’re an investor, one of the big advantages of buying a newly constructed property is that you can claim depreciation as a tax-deductible expense. This includes the depreciation of assets in the buildings and the cost of the building itself, as well as for wear and tear on fixtures and fittings in the property. The newer the property, the higher the level of depreciation.
2. Better quality tenant
Brand new properties tend to attract a better quality tenant, which means a higher rental income and fewer headaches for the landlord!
3. Less maintenance
Unlike new homes that require little maintenance, owners of second-hand properties are often faced with immediate maintenance issues. The costs of repair in older homes can significantly inflate ongoing expenses.
4. Warranty
As a purchaser of a new property you are protected for a number of years against major building defects by home warranty insurance, which all builders of new homes in Australia are required to carry.
Reasons to buy ‘Old’
1. Equity
There is little opportunity to add value to a new home, whereas the investment made in an old home can grow in the future should you choose to renovate or extend.
2. Affordable
It’s often said that you get more house for less dollars buying a second-hand home than when buying a new one. For entry-level investors, old properties can have the advantage of an affordable price tag.
3. Unique appeal
Older homes often have great features that can’t be replicated in new homes. A well-maintained period-style home, for example, will reap rewards in capital growth down the track
4. Established sales history
There’s less guesswork in buying an established property because you’ll be able to trace back the property’s appreciation and find out how the suburb has performed. This can help give you the assurance you need that you’re buying a good property.
Rate Rollercoaster
We’ve spent the year expecting interest rates to go up, now there’s hope they may be coming down. It’s an unusual reversal of fortune and one that took many economists by surprise when just a few months ago the Reserve Bank was widely tipped to lift rates at least twice before Christmas.
While there is much disagreement about when the rate cut will happen and by how much, the majority agree the Reserve will at least keep rates on hold until the new year.
In a recent survey of 20 economists by the Australian Financial Review, the most popular prediction for the next six months is that the Reserve Bank will leave rates untouched (9 out of 20). Five said they expect rates to be cut by the end of the year, while five tip rates to rise over the next six months.
The Reserve Bank’s next move is anyone’s guess, but the progression of Europe’s debt crisis and America’s economic slowdown may have a part to play. In the meantime a number of lenders are cutting their fixed mortgage rates, so if you are considering taking advantage of the lower rates on offer, call us and we would be happy to talk you through the process.