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Catherines Chat

Wholistic Financial Solutions provides a lot of essential information and updates regarding the property investment industry. Check this page for the updates.

Australia's Property Market outlook

Friday, July 27, 2012

Housing market to remain soft: NAB survey

Australia’s housing market is predicted to remain soft over the next year, with a NAB survey predicting a decline in house prices of 0.7 percent.

NAB’s Residential Property Index fell in the June quarter, dropping to -11 from +5 in the first quarter, weighed down by weaker conditions in Victoria and NSW.

The survey polled around 300 real estate agents and property managers, property developers, asset and fund managers, and owners/investors.

Victoria (-43), SA (-15) and the NT (-15) posted the lowest scores on the index, while WA (+34) and Queensland (+2) are the only states in positive territory.

NSW slumped dramatically over the period, from +28 in the previous quarter to -13 by the end of June 2012. Victoria’s index score moved further in the red, from -16 to -43.

Key findings of the report include:

  • National house prices fell by 2 percent in the June quarter, with the biggest falls in Victoria (2.9 percent) and NSW (2.3 percent). They are expected to fall by 0.7 percent nationally over the next year, but grow by 1 percent over the next two years
  • Average national rent growth slowed to 0.4 percent in the June quarter, down from 1.1 percent in the first quarter of the year. The long term outlook is for softer rents in all states over the next two years, except for WA
  • Respondents indicated tight credit conditions and housing affordability are the most significant constraints on new housing development. Employment security is now viewed as the biggest impediment to purchasing existing property, especially in Victoria and Queensland
  • Capital growth expectations are strongest in the sub-$500,000 price range, while the outlook for properties worth more than $2 million remains poor

Westpac Notes > 6.3 return - contact us now

Thursday, July 19, 2012

WFC has been afforded an opportunity to take part in the recently-announced
Westpac Subordinated Notes issue. Up until recently, these investments were only available to institutional investors.

 

In an environment of low and decreasing interest rates, we are pleased to be able to provide our clients with access to investments that may assist them.
Please find attached a brief overview of the Westpac offer.

 

In short:

  • The notes offer a floating margin above the 90-day bank bill rate (BBSW) – with current yields expected to be in excess of 6.3%pa. This represents an expected margin of between 2.75%-2.95% above the BBSW, meaning that if this rate increases over time, so will the return to investors. Likewise, if this rate reduces so too will this yield.
  • The notes are unsecured, so rank behind creditors and term deposits if Westpac were to be wound up, but rank ahead of shareholders and holders of other instruments.
  • Returns are paid quarterly
  • The notes are listed on the ASX, so may be redeemable prior to the minimum term of 5 years (or expected term of 10 years).

 

Unfortunately with these types of investments, decision-making time is limited. In this case, WFC is required to make its formal bid for an allocation of these notes by 12pm this Friday, 20 July 2012. While monies are not required until mid August, a formal application needs to be made this week. This is typical of these types of investments, and the reason they have traditionally only been open to institutional investors.

 

In our view this may be of strong interest to those who have accumulated cash but are looking for income as interest rates decrease; and are uncomfortable investing in more volatile investments, such as shares. With the floating rate, any future increase in the interest rates (ie. over the next 5-10 years), will increase returns to investors; and in a decreasing environment, the returns will decrease, with the fixed margin staying intact (ensuring returns remain above cash rates).

 

The risk of this investment is that the Westpac Bank cannot pay its liabilities when they are due, resulting in the company being wound up (and then not having sufficient assets to pay investors in these notes). The recent GFC demonstrated the relative strength of Australian banks, but nevertheless investors need to weigh up the risk of this possibility.

 

Given the very short timeframe we would ask that any interested parties please
contact our new Investment Adviser, Mark Zigouris immediately with any interest on 0401 476 221.

 

We look forward to being able to provide you with more of these types of opportunities in the future, and thank you again for your ongoing support.

Year End Tax Tips for Property Investors

Friday, June 29, 2012

Year End Tax Tips for Property Investors

n  Documentation – when it doubt – keep the record anyway so your Accountant can claim it if possible.

n  Depreciation – Have you got a depreciation report for every property?  If not, get one.  It is free cash in your pocket.  We use a company that guarantees more cash to you than the report costs

n  Travel – ATO accepts 4 trips per year to the property and maybe more if justified.  Keep travel expenses and diaries.

n   Interest Expenses  - Learn how to maximise tax deductible debt and minimise non tax deductible debt

n  Pre-Pay Expenses – interest & other expenses can be pre-paid 12 months in advance

n   Manage Capital Gains & Losses – if you are selling a property speak to your Accountant first.  An Accountant experienced in CGT can save you hundreds of thousands of dollars by correctly planning Capital Gain

n   Manage Capital Losses – if you are selling an Asset for a Gain are these any Assets you can also sell for a loss to help you minimise the gain?

n   PAYG Variation – get it done now ready for next year. Extra cash in your pocket per fortnight.

Little known Tax Tip for Year End Planning for Business

Friday, June 29, 2012

Little known Tax Tip for Year End Planning for Business

 Increased Instant Asset Write-Off Threshold for business starting July.  Assets costing under $6,500 will be able to be claimed outright rather than depreciated.  This is up from the existing $1000 rule.  So you may want to delay any large purchases till next week. 

Year End Tax Tips for Property Investors

Friday, June 29, 2012

Year End Tax Tips for Property Investors

n  Documentation – when it doubt – keep the record anyway so your Accountant can claim it if possible.

n  Depreciation – Have you got a depreciation report for every property?  If not, get one.  It is free cash in your pocket.  We use a company that guarantees more cash to you than the report costs

n  Travel – ATO accepts 4 trips per year to the property and maybe more if justified.  Keep travel expenses and diaries.

n   Interest Expenses  - Learn how to maximise tax deductible debt and minimise non tax deductible debt

n  Pre-Pay Expenses – interest & other expenses can be pre-paid 12 months in advance

n   Manage Capital Gains & Losses – if you are selling a property speak to your Accountant first.  An Accountant experienced in CGT can save you hundreds of thousands of dollars by correctly planning Capital Gain

n   Manage Capital Losses – if you are selling an Asset for a Gain are these any Assets you can also sell for a loss to help you minimise the gain?

n   PAYG Variation – get it done now ready for next year. Extra cash in your pocket per fortnight.

Tax Saving Tips for Year End

Friday, June 29, 2012

Year End Tax Tips for Individuals and Businesses - Save Tax Now - Hurry ends 30 June

n  Delay Income – invoice or get paid after 30 June

n  Bring forward expenses

n  Prepay Expenses up to 12 months in advance

n  Maximise Concessional Super Contributions – up to $25,000 or last opportunity for those over 50 to contribute $50,000

n  Maximise Medical Expenses as thresholds change next year

n  Utilise the Super Co-Contribution –for the last time the Government will match up to $1000 -  reducing to $500 from 2012

See www.wfscanberra.com.au/ for more info

 

Tax Minimisation

Wednesday, June 27, 2012

Individuals looking to maximise their superannuation dollar, who will earn less than $61,920 in the 2011/12 financial year should look to make an after-tax contribution to their superannuation to qualify for the Government Co-Contribution.

At present the government will match after tax contributions dollar for dollar up to a maximum

of $1,000 for a person earning up to $31,920. The maximum then reduces by 3.333 cents for every dollar of total income, less allowable business deductions over $31,920 reducing to nil at $61,920.

From 1 July 2012, the maximum co-contribution payable will be halved to $500 a year

SMSF and Property

Monday, June 18, 2012

Hello All,

First you tube video has been uploaded:

http://www.youtube.com/watch?v=222bPwA2LxQ

 

Topics include Loans in SMSF. Property in SMSF, CGT in SMSF advantages in SMSF and DIY super. 

Hope you enjoy it!

feel free to suggest topics you would like me to discuss.

 

Catherine

 

Tax Saving Strategies / Super

Friday, June 15, 2012
If you have any spare cash now is a good time to consider boosting your 'concessional' superannuation contribution before 30 June.  Any contribution made is tax deductible and can save you tax.  Employee's need to contribute via salary sacrifice whereas self employed or retirees can contribute directly.   From 1 July onwards the contributions cap for over 50's is reducing to $25,000 so now is the time to consider whether to take advantage on the higher $50,000 cap that applies until June 30. For more information visit http://www.wfscanberra.com.au/

SMSF and Property

Friday, June 01, 2012

  A new battalion – property and superannuation join forces?

 

Since time immemorial it has been argued as to whether the benefits of gearing property investments outweighed the tax concessional environment offered by superannuation.  Now the battlefield has changed dramatically.  Why would you choose one over the other when you can have the best of both worlds.  New laws introduced in September 2007 allow Self Managed Superannuation Funds (SMSF’s) to, for the first time, buy geared property in a simple and uncomplicated manner.  SMSF’s can now select a property of their choice, be it residential or commercial, and borrow up to 80% of the value of the property. 

 

The most common investment strategy seen in the baby boomer era was to invest all surplus funds into accessible investments including property and shares and then cashing these in and contributing the funds into super just prior to retirement.  The only disadvantage of this strategy was a potentially very large Capital Gains Tax bill. 

 

However, this strategy has been dramatically hampered by the Governments new contribution rules which only allow $25,000 of concessional contributions per year.  

 

The effect of the new contributions rule is to significantly disadvantage generation X and Y.  It is fair to say that most young singles and young families have better things to do with their money and more pressing needs than to make the most of their $25,000 per year contribution limit.  Then when they are getting closer to retirement and have more surplus funds they will be prevented from, like their pre-decessors, making large contributions just prior to retirement.

 

Why would you buy property in a SMSF instead of personally?

 

For many reasons including;

 

  • you get the benefit of ‘leverage’,
  • a maximum of 15% tax on any rental income in excess of costs,
  • you receive a tax deduction for the loan repayments of principal (which is normally impossible) via salary sacrificing the amount required to cover the shortfall,
  • asset protection – the asset is protected from creditors in the event of a lawsuit or bankruptcy (some conditions apply),
  • the property can still be sold and the loan repaid at any stage,
  • any capital gains on the property when sold will be taxed at a maximum rate of 10% (if asset held for more than 12 months)
  • But the biggest incentive of all – if you keep the properties until age 60 and commence a pension from the fund,
  • any capital gain on the property will be TAX FREE,
  • any rent on the property will be TAX FREE,
  • any income paid out to you will also be TAX FREE.

 

The laws are only new and law complying products are now being introduced and marketed.  It is envisaged that these products will hit the market like a storm once investors realize the potential.  SMSF's are now the largest segment of the superannuation industry and it is likely that this figure will increase exponentially once knowledge of the loan products becomes widespread.  It is also interesting to note that this may be the first time in history that all advisors (financial planners, accountants, auditors, property advisors and mortgage brokers) have a common ground for advising clients.  All advisors have something to gain by assisting clients into these products. It’s not only a busy time ahead for advisors but a time to join forces and put a cease fire on the battle.

 

The team at Wholistic Financial Solutions can assist all trustee of SMSF’s consider this option in regards to borrowing to buy property within their super fund.   Come along to our free information seminar or request a free consultation to discuss your personal situation.  Call Catherine on 02 6162 4546


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