Now that the dust has settled on the Federal Government’s latest national Budget, it’s important to understand what it means to you and your mortgage.
Treasurer Scott Morrison called the 2017-2018 Federal Budget honest” and one that – “does not pretend to do things with money we do not have”.
Whatever side of the political fence you sit on, though, cutting through the confusion to figure out what some of the basics are – and how they will impact you – is important.
From July 1, 2017, all first home-buyers will have the ability to salary sacrifice a percentage of their wage into their chosen superannuation fund – and use it to help them save for a home deposit. By salary-sacrificing extra amounts of pre-tax income – up to $15,000 per year above the compulsory superannuation contribution (capped at a maximum of $30,000) – the initiative is designed to help pay towards their purchase of their new home.
On top of this change, additional contributions will be taxed at 15% and subject to the $25,000 combined annual limit for both pre-tax and employer contributions.
The flow-on of that news is that, from July 1, 2018, first home-buyers can then withdraw cash they have saved – as well as any earnings on that money. The tax rate for those withdrawals will be taxed at marginal tax rates less a 30% offset.
It’s a move that is designed to fast-track savings for first home-buyers and offer more effective savings strategies than the average bank account option.
Despite all the talk about negative gearing in the past year, the topic was largely left off the Budget agenda, with no obvious changes to the investment policy. It was made clear, though, that some tax advantages previously given to property investors would have restrictions imposed.
Effective immediately was the news that all negatively-geared landlords would no longer be eligible for any tax deductions related to travel expenses associated with owning and renting out an investment property.
The rules around depreciation deductions for any plant and equipment items were also affected. Changes in the Budget mean that, from now on, property investors are only eligible to claim any deductions on plant and equipment items (including things such as ceiling fans and washing machines) that they actually bought.
For investors keen to explore the affordable housing market, a variety of tax incentives aim to reward them with various tax incentives and encourage more buyers into this lower-end of the real estate market. ‘Qualified affordable housing’ investors will benefit from a discount of 60% in Capital Gains Tax – something that could make a pleasing difference to that next investment decision.
To truly understand how the Federal Budget for 2017-2018 impacts you and your property investment decision, talking to a trusted accountant is always a great start. With the right information up your sleeve, it might be an ideal time to find the right loan to suit you and work out the best way to take advantage of tax savings, while they are on offer.
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If you care about sustainability and environmental-awareness, you’ll appreciate that going solar is about more than just saving you some costs on your utility bills.
The truth is, though, making the decision to switch to solar power is an initial investment. But, the good news is that it can reward you with long-term savings.
To decide whether solar power is right for your property ask yourself these important questions:
Knowing whether solar power is your smart choice needs more than just a great climate to keep it viable. Solar panels make sense if they enable you to produce electricity for a lower price than what your utility provider charges you.
For a sufficient amount of solar panels to produce the electricity your home requires, your roof needs to have the space available.
And if your roof is shaded by large trees that border your property, there could be a problem. Roofs that have the wrong orientation can also reduce your ability to make the most from solar panels. It’s important to understand that it’s not a deal-breaker – today’s smart solar panels can absorb the sun’s energy any way they face, but it does mean a reduction in performance.
Yes, you have the potential to save money on future electricity bills – and even earn money by selling power back to the grid – but the immediate reality is that installing solar panels on your roof requires money.
For many home-owners, refinancing an existing mortgage to access the funds needed to install solar roofing panels makes sense – and by talking to an experienced mortgage broker, you’ll understand the finance options on offer to you, to suit your own individual circumstances.
The federal government’s Solar Credits Scheme enables eligible households to receive payment for STCs that are created by their solar energy systems.
If you sell the STCs yourself, the paperwork is onerous – and there are applications and associated fees, plus a protracted sales process that can see you waiting several months, post-installation, to be recompensed.
According to Choice magazine, a typical 2.0kW system installed in Sydney in 2015 will generate 41 STCs over a 15-year period. If the sale price of each STC was $30, that adds up to a $1230 saving off the cost of your initial installation. Use the official Australian Government’s (Clean Energy Regulator) calculator, to help you work out how many STCs you system may generate. It can be found here: https://www.rec-registry.gov.au/rec-registry/app/calculators/sgu-stc-calculator.
If you need advice for a home loan, business or commercial loan, self-managed super fund loan, or an investment home loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need.