How will these Super changes affect you?
Did you hear about the recent policy changes that could affect your retirement (no matter how far that is away!)?
From new Stamp Duty policies to new superannuation policies, these could mean changes to your current and future property investment decisions.
We want to make sure you know what these changes, the opportunities created as well as avoiding the risks involved.
Here are the facts:
Retirees are now given incentives to downsize
Australians aged over 65 who sell their home which they have owned for over a decade will be able to put up to $300,000 in sale proceeds into their superannuation.
This incentive to downsize will help free up larger homes for families to move into and offer the sea change lifestyle they might be looking for.
Investors won’t be able to claim travel deductions
Investors who previously has travel expense tax deductions related to their investment property will no longer be able to make these claims, even if travelling to collect rent, maintain or inspect a premises, they will not be allowed as tax deductions.
New Superannuation “transition to retirement” rules have been implemented and there is no longer a compulsory retirement age. Access to your super depends of your super preservation age between 55 and 60 and the age pension age has been increased from 65 to 67.
There are also new contribution caps introduced such as the concessional Contribution Cap is universal $25,000 for all. Non-concessional contribution cap is now $100,000pm (was $180,000pa) as well as the Introduction of Balance transfer Cap at $1.6million per person
New Home Buyers Super Saver
The new super saver scheme will allow first-time home buyers to put up to $15,000 a year, to a maximum of $30,000 into their superannuation.
These funds can later be withdrawn for a home deposit, including any earnings the deposits have made.
This means a tax incentive to save more, and can be taken advantage of as a couple with each claiming $30,000.
For more information of changes please visit your local government’s website.
So your home loan has been rejected. What now?
With recent changes to lending requirements and banks sharpening their pencil in regards to the amount of investment and consumer loans their allowing, it’s now becoming harder than ever before to achieve finance.
If you’ve been rejected for a home loan don’t panic! Different lenders have different criteria for mortgages, and one rejection doesn’t mean that you won’t be able to buy a home.
Here are some simple yet effective steps that can assist you getting back on track and achieving a successful outcome on your next application.
1. Ask why you were rejected
Your lender should be able to tell you the reason/s why you were rejected, which will give you the opportunity to change and fix things before your next application. It could be something simple that you missed!
2. Review your options
Create a plan before applying again. Research different home loan lenders – the more you know, the more informed you’ll be to make the best decision on who to partner with to get approved.
3. Check your credit profile
Sometimes lenders decline because of your credit history. You will need to solve any outstanding issues with your credit file before applying again. If you do have late payment, missed bills get your finances in check and have reasons to explain your financial history to your next lender. For the future, ensure you pay bills on time and develop a regular savings plan. The more reliable you are financially, the better you will appear to future lenders.
4. Review other debts
If the reason you were declined was credit card or other debts, look at consolidating or clearing your debt before undertaking any new loans. Reducing your credit limits or even cancelling cards can go a long way in the eyes of your future lender.
5. Don’t give up
Only those who give up fail!
Always try again, there are plenty of lender options out there. There’s bound to be one that matches your budget and needs however you may need to change your expectations in terms of what you can realistically afford in repayments and what you can borrow.
If you are rejected for a loan the key is not to panic. Loan rejection isn’t uncommon and it certainly doesn’t mean you will never be able to secure finance. Provided you show you’re a reliable financial customer with a good credit history and a sound savings strategy, you shouldn’t have too many difficulties obtaining finance.
6. Appoint a broker
I still believe that finance brokers are the best option currently for securing finance. A good broker’s knowledge about the mortgage landscape, current stipulations with different lenders and suitability to your personal circumstances can prove invaluable when trying to access funds. Please as you continue to build your portfolio the broker becomes an advisor on your journey aware of your personal lending history, needs and ultimate goals.
It can be confusing what type of mortgage to get. It’s not only important to check the right rates for you but make sure you’re getting the right features in your home loan.
At CPG our brokers work for you and help whether it’s a simple rate comparison or a full financial health check – talk to one of our brokers today
Why People Struggle in Retirement?
Recent research has found that 95% of working Australians are not financially prepared for a comfortable retirement and a significate number continue to delay planning for life after work. There is usually a gap in what they envisage for their retirement and what the reality is.
Around 87% will be dependent on welfare so if the pension age is increased to 70, many of us will need to consider working longer to have an income and build more retirement savings.
Think you’re too young to start worrying about retirement? Decisions you make now regarding life style and financial choices will make your retirement what you want down the track.
Whether it consists of golf club memberships, living in your dream home or luxury holidays, here’s our top tips to ensure you’re retirement ready:
Think about retirement when you think about saving
It really does pay to start thinking about your retirement when you save today.
Although in Australia if you’re employed a percentage of your income is paid to prepare for this, it’s not always enough for your future needs. The more of your income you set aside for retirement, the easier it’ll be to retire comfortably. By saving early you can ensure your retirement benefits from the value of compound interest.
Have a plan
When it comes to retirement most people don’t have a plan or retirement strategy. The success of this plan is the cumulative effect of the small steps and decisions you make each day.
By evaluating this plan, you may need to adjust your lifestyle choices of today to make it a realistic one. Living a champagne lifestyle today may get you a beer budget come retirement.
What age will you retire?
Do you know how many years your retirement savings need to provide enough income for? These days it can be safe to assume that many of us will live to the age of 90 or beyond.
With many of us wanting to retire in our 60’s, there is usually a big difference in the age people say they want to retire to when they actually do.
Insurance is important
Taking out insurance to protect your retirement plan is an important part of your strategy.. There are many types of insurance that should be considered include life insurance, health insurance and long-term care and can make the difference between a comfortable retirement or financial stress and worry.
The exciting part of getting ready for retirement
When transitioning from work life to retirement, we work less and play more. It’s more than just money we’ll need, but the reality is all retirement dreams need money — to a degree. Thinking about things like relationships, health and a life that engages your interest and fulfils you can help you save more.
Once your financial goals are in place and your retirement plan filled with motivating interests, you’re find yourself one step closer to a comfortable retirement in all areas!
Want to retire earlier? Do you know how much you need?
If you need assistance is creating a retirement plan and strategy, contact one of our wealth creation specialists today. They can help you create what you really want; a financially secure future, a retirement to look forward to and to enjoy life’s luxuries along the way.
Start your plan now
Investing in a slow market
It seems every property expert, blogger and real estate agent are talking about nationwide slowing of the property investment market. With banks tightening investment lending, higher rental vacancies in some areas and sluggish growth, the market seems to be making a polar shift from the previously enjoyed golden years of the last decade.
However slowing markets are not a bad thing and should be considered as opportunities rather than the doom and gloom approach taken by the media. One thing you can always rely on is that markets will rise and markets will fall. The timing is not always an exact science, however historical trends paint a consistent and somewhat reliable picture of what we can expect in the future.
Today, we consider the keys to help you adapt, thrive and take massive leaps forward in a down market.
1) Don’t Panic
One of Warren Buffets most famous lessons he shares is don’t panic when everyone else is. Investing is thinking with your head not your heart. Keeping the perspective that this is a long term game will help you overcome the short term downs.
In a down market there is allot more opportunities on offer and allot less competition vying for them.
2) Change your expectations
it can be hard to accept things are slowing and the unknown of when things will turn back around. The sooner to adjust your expectations of the current market and your returns, you can refocus on the opportunities this type of market can bring instead.
3) Don’t stick your head in the sand
Maximising your investing result in a slow market is best achieved when you have fully educated yourself to the market and trends. There are always hot spots and opportunities, you just need to know where to look. By researching smarter you can find and negotiate below market value property bargains and strong returns. Even with banks tightening their lending there are still options out there including government subsidiaries such as the National rental assistance scheme, distressed developer sales and flip opportunities.
4) Try a different strategy
Many investors in a slow market are trying a new property investment strategy. Experts have reported an increase of investors looking for “value add” opportunities, such as renovating, subdividing or even land with future rezoning potential.
Overall the property investment outlook in Australia long term will remain favourable. With our enviable conditions such as extremely low interest rates, low unemployment levels and growing populations, we remain one of the best countries in the world for real estate investing. Focus on seeing the property cycle downswing as an opportunity to pick up a great deal and get ahead rather than a time to batten down the hatches and wait for the storm to pass.
Investing tax mistakes you could be making
Yep! Tax time is just around the corner and smart investors know it’s a great time to claim back a portion of their investment expenses.
It seems however according to the ATO, there are common mistakes made when it comes to claiming tax. The tax man keeps a close eye on those who over claim but nobody tells you if you are under claiming. Here are the top mistakes the ATO listed and the ones here at CPG we come across from investors.
Please note to seek legal and financial advice from qualified professionals to ensure you claim accurately.
Not using an accountant who understands property
Using the right accountant is extremely valuable, especially as a property investor using an accountant that understands property is worth their weight in gold! Ask your accountant what experience they have in property investing before making your decision.
Paying down tax-deductible debt before non-deductible debt
Most experienced investors will know that it can be tax effective to pay down non-tax deductible debt before tax deductible, such as your home. Most investors will have their investment properties on an interest only arrangement until they have eliminated non-deductible debt.
No depreciation schedule
A depreciation schedule is the schedule of items that can be depreciated at a certain rate allowing you to claim a tax deduction against your taxable income. It is amazing how many people don’t even have one! It is wise to get your accountant to assist you with this as this can save you thousands.
Trying to claim expenses you can’t.
There are certain types of property investing expenses that cannot be claimed as part of your tax return. For example property improvements must be claimed over several years as capital works deductions where repairs can be claimed in the same tax year. Also any conveyancing expenses that you incur during the purchase and selling process cannot be deducted. Instead, these costs make up part of the cost based for capital gains tax purposes.
Keeping the right records
Property investors must keep accurate records, regardless if they prepare their tax returns themselves or not. A record must be kept of the following:
- Rental income and deductible expenses and these need to be kept for 5 years.
- All documents relating to the ownership of the property including all purchasing and selling costs, again these need to be kept for 5 years.
By keeping all of these documents handy, it will be a lot easier to make accurate calculations and enlist the help of a tax professional.
Although tax losses are great, the goal of property investing is to earn more income than you pay in expenses. Set your goal for profit as a tax loss is still a loss that costs you money but ensure you are claiming all that you are legally entitled to at the same time.
Leave us your comments below!? Which tip could help you maximise your tax return?
The Property Insider Magazine – Download Now!
Our first edition of The Property Insider includes insights into:
- How to conduct property due diligence
- Market watch and industry news
- How to choose your property expert team
- Placing your property investment in the right hands
Why it’s crucial to choose the right Settlement Agent!
By the time you have selected your investment property or home you may think the decision making part is over. Yes the hardest part is over, but there are still many decisions to be made.
I have personally witnessed many sales contracts fall through due to a number of problems that arise, some due to the settlement process. In fact property experts estimate up to 10% of sales experience a problem that delays or even stops a settlement from going through.
In my video this week I share my top tips for selecting the right settlement agency for you and why this agent should know and work in the area where you are buying.