If you are an experienced property investor, you may be wondering it is worth investing in NRAS real estate. One of the main reasons is the tax free incentives over 10 years handed out by the State and Commonwealth Governments. These incentives are indexed linked to the rent factor of the CPI and increase each year. Another good reason is the potentially higher returns bringing about lower costs for investors. The full incentive is paid regardless of annual earnings for the complete amount of years that the property is in the NRAS scheme. Investors will receive their tax free incentive at the close of every tax year in 2 parts; 75% from the Commonwealth Government and 25% as a non taxable cash payment from the relevant State Government. These payments are normally around June or July every year.
An NRAS approved home will be put into a letting pool whereby a tenant will pay at least 20 percent less than the market rent; for example is the market rent is $450, the NRAS rent can be a maximum of $360. This is a requirement of the NRAS scheme and in addition, all new build homes are required to be let out to eligible households. There are 50,000 such dwellings being planned throughout Australia
Investors are permitted to buy more than one property and they will receive the same incentives for each investment property. Owners can also sell their NRAS real estate at any point and where properties change ownership half way through the year, the NRAS benefit is pro-rated to the period of ownership relevant for each owner. Also, investors who wish to leave the scheme may do so by providing notice and also relocating their tenants. In both scenarios, reasonable notification periods do apply.
Borrowing is acceptable and in fact quite normal as NRAS investments are now being supported by a variety of lenders across the nation. Also there is now a viable option for property investors via their SMSF, looking to buy assets and wishing to borrow against the value of the asset, to be achieved in conjunction with NRAS.
The Dept. of Families, Housing, Community Services & Indigenous Affairs can offer further advice so go to; http://www.fahcsia.gov.au/sa/housing
Details on the refundable tax offset and other taxation matters is located at; http://www.ato.gov.au/businesses
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