Top Trends In The Property Market
I was recently asked to speak at a mortgage brokers conference about the top 5 trends that accountants are seeing in the property market.
The property buyers that I get to see generally fall into one of two categories:
Firstly, owner occupiers who are in business and need our assistance to get their financials up to date in order to get finance; and
Secondly, people looking to make money from property in one form or another and want to know the tax implications of doing so.
The trends that I am seeing from people seeking our assistance are:
Investors putting cash reserves into the property market while interest rates on cash deposits remain so low, to chase better returns.
With interest rates so low, what we are currently seeing is that while properties may be negatively geared they are cashflow neutral once the tax benefit on the depreciation and capital works allowances on new properties are taken into account.
People are moving out of Sydney to find more affordable housing with Brisbane & Tasmania being popular options.
What we have seen is people looking for a transitional arrangement where their property can earn income in the short to medium term. The people in this category are self-employed and/or have flexible work arrangements.
Buying a property to knock down a home and build a duplex, with the intention of living in one and renting the other.
This is a complex property transaction particularly if considering a family arrangement to complete the development and I wouldn’t recommend doing it without first obtaining tax and legal advice.
Business plans include purchasing a commercial property, particularly property to be utilised by health services.
I very much see this segment as being in the up and coming category as our demand for health services grows.
We will start to see 5% deposits on exchange of contracts becoming the norm, particularly with property prices currently being so high.
Not all vendors require a 10% deposit on exchange of contracts. Most will accept a 5% deposit, you just have to ask. This is particularly relevant for investors who want to maximise the amount of funds borrowed for which they can claim a tax deduction. It is important to note that even if 100% of the purchase price is borrowed only the interest on the funds applied to the purchase at settlement will be deductible. Interest attributed to the surplus funds deposited into the borrower's bank account won’t be.
If you are thinking about purchasing property, think ahead and make a plan. Don’t leave it until you find the perfect property before you start getting your finances in place. This can take time, particularly if your tax returns aren’t up to date.
If you would like specific advice tailored to your business and circumstances, Accounting Heart offers affordable service packages where you can work with Sonia one-on-one to help you get your business where you want it to be. Book your FREE Discovery Call to find out more.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.