Finance market update

Get a Depreciation Schedule.

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Don’t risk it – Substandard Tax Depreciation will not withstand an ATO (Australian Taxation Office) Audit. Only a Qualified Quantity Surveyor who is also a registered Tax Practitioner with the Tax Practitioners Board can produce Tax Depreciation Schedules.

According to the ATO 52% of Property Investors don’t claim all their available deductions – Are you leaving your money on the table?

Companies or individuals who prepare Tax Depreciation Schedules without conducting a full property inspection simply cannot certify that the calculations provided are legitimate and accurate.

2.5% on the building is claimable from Sept 87 – present

It is common to receive over 2,000% R.O.I. for your Depreciation Schedule over the life of the property.

Chinese influence on property prices

A recent report forecasts Chinese Investment in the Australian market will continue to rise. Credit Suisse suggests that residential property investment from Chinese based investors and new immigrants from China will more than double to 60 billion over the next 6 years. Some members of the public and misinformed media representatives blame foreign investment for making it more difficult for first homebuyers to get into the market. This is indeed a distorted view. “Realistically it’s still a pretty small percentage of the entire market” according to Credit Suisse.


The RBA said that economic growth was expected to be in the 2.5-3. 5% range in 2015-2016, with GDP growth forecast to remain below trend for a bit longer.

The RBA have an inflation target, which they try to influence by the cash rate, so this means in order to foster sustainable growth, they will remain vigilant with their focus on growth, and the outlook.

Why it is vital to seek finance advice from a broker and not a bank

Banks often go through periods of focusing on one type of client over another, such as first homebuyers, small business, and lately it has been investors.

It is important to get the choice of lender right, by that I mean, they should also be chosen in a more specific order rather than randomly or haphazardly.

If you choose a lender who does not add a qualifying rate to your existing debt, for your first couple of properties, you may reach your borrowing capacity with them sooner than what would be preferable. However, if you choose these lenders after first using ones that do add a qualifying rate to existing repayments you can enhance and optimize your property portfolio growth.

Some big changes have occurred over the last week with APRA throwing its weight around the banking community.

The Australian Prudential Regulation Authority oversees banks, credit unions, building societies, general insurance, life insurance, and most members of the superannuation industry.

These changes include.

  1. Rate loading: higher interest rates, both variable and fixed for debt for investment purpose.
  2. Higher qualifying/ benchmark rates on their servicing calculators, thus negatively impacting on the amount one can borrow.
  3. Lower loan to value ratios
  4. No willingness to negotiate for no existing clients, some lenders have reduced what they will offer to borrowers who are not already customers of the bank
  5. ANZ and NAB cease lending to Self Managed Super Funds for residential property
  6. BankWest have limited investment lending to 80%
  7. AMP used to use 100% of rental income toward servicing, where as other lenders were using 75% to 80% typically, now Amp are in line with others.
  8. Discounts being offered for larger loans are no longer being offered by a number of lenders on the investment portion of these loans
  9. Some lenders still lend up to 95% LVR (loan to value ratio), but this number has dramatically reduced over the last week.

These changes are good as it further enforces the need for investors to seek advice. This will also help protect investors who are not being aided by property advisors and credit advisers. Those that are not being aided by these professionals are more prone to succumb to the antics of spruikers.

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