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May 15, 2022
The pandemic property market
The property market has not been exempt from global changes that the COVID pandemic has caused. The two years since the pandemic have been tumultuous, but also lucrative for investors and the industry as a whole. Key points from a recent CoreLogic report provides a snapshot of the effects of the pandemic within the marketplace. Whether it was the economic and employment-based effects of city and state lockdowns, the introduction of government home-buying and building incentives and the increasing popularity of regional living and low-density housing, the era of COVID has left its legacy on the composition of buyers and dynamics of the housing market. Home values eclipse previous records, rising by 25 per cent Despite an initial dip for the property market during the pandemic, housing values rose 24.6 per cent between the end of March 2020 and February 2022. Cumulative change evidenced in the CoreLogic Home Value Index since the onset of COVID-19 shows a relatively small decline at the onset of COVID-19. For example, sales and listings volumes are far more affected than prices. Home values declined -2.1 per cent between April 2020 and September 2020, before soaring amid low-interest rates, high household savings, government grants and a sharp reduction in the supply of housing. By February 2022, CoreLogic estimated the total value of the residential real estate to be $9.8 trillion, up from $7.2 trillion at the onset of the pandemic. This is a significant change for the property market. Rents rose 11.8 per cent to record highs while gross yields fell to record lows Annual rent value growth throughout 2021 was at its highest level since 2008. Median advertised rents in Australia have increased from $30 per week to $470 per week. In New Zealand, that figure is closer to $530 for a four-bedroom home. For investors who have recently purchased long-term rental accommodation, rents may have increased due to higher purchasing prices. Through the pandemic, there has been a clear shift in rental preferences toward lower-density housing options, where the upwards pressure on rents has been more substantial. This trend has evolved over the past year, with rental affordability gradually deflecting more demand towards higher-density rental options, where the cost of renting is more affordable. Housing debt levels scale new heights However, gross rental yields have declined. This is because gross rental yields are a portion of the purchase price of a property — and purchase prices of properties have grown 24.6 per cent since March 2020, outpacing the 11.8 per cent rise in rents. As housing growth has started to slow, record-low gross rent yields appear to have begun stabilising. Although total outstanding credit reached over $2 trillion in January, data shows monthly new finance borrowed for the purchase of property continued to hit fresh record highs through January 2022, at $33.7 billion. High levels of housing debt, particularly where it has grown faster than incomes, create vulnerability in the economy. However, it is important to frame debt levels in the context of high asset values and relatively low-interest costs. Official data shows housing interest payments to income have fallen to their lowest levels since 1999 — and household debt has trended lower as a portion of housing values. CoreLogic prides itself on the most accurate real estate data in Australia. Smoke alarm legislation changed on January 1 2022
May 6, 2022
Don’t forget to organise a depreciation schedule
The end of the financial year can be a busy time for property investors, that’s why BMT Tax depreciation are here to remind you of the benefits of arranging a depreciation schedule before 30 June. What is depreciation? Depreciation is the natural wear and tear of a building and the assets within it over time. The Australian Taxation office (ATO) allows owners of income-producing properties to claim depreciation as a tax deduction. There are two types of depreciation. Capital works (Division 43) is claimed on the building’s structure and items that are permanently fixed to the property. And plant and equipment (Division 40) are items which are easily removable from the property or are mechanical in nature. Depreciation is a non-cash deduction, meaning an investor doesn’t need to spend any money to be eligible to make a claim. Because of this, depreciation deductions are frequently overlooked. Failing to claim depreciation can mean missing out on thousands of dollars. During FY 2021/22, BMT found investors an average first year deduction of almost $9,000. Claim the cost of your schedule straight away To maximise deductions and claim all eligible assets, you should organise a tax depreciation schedule as soon after you purchase a property as you can. A BMT depreciation schedule has a one-off cost that lasts the life of the property (forty years) and will ensure all claims are maximised and are fully ATO compliant. The cost of the depreciation schedule is 100 per cent tax deductible, and if you order a depreciation schedule before 30 June you can claim the fee straight back that financial year. This also reduces the risk of forgetting to claim the depreciation schedule’s fee as a deduction in the following financial year. Partial year claims You don’t have to have owned a property for a full financial year before claiming depreciation deductions. You can claim depreciation if you have owned a property for a short time before the end of the financial year, even if that is weeks or days. The depreciation value of the assets will be calculated by how long the property has been owned. For instance, if the property has been owned and rented out for a period of three months, the owner is eligible for 25 percent of the yearly deductions. Receive payments regularly using Pay as You Go (PAYG) By arranging a depreciation schedule sooner, you can access additional cash flow throughout the year by incorporating a PAYG withholding variation. With the help of your accountant, submitting a PAYG withholding variation will estimate your expected tax return for the financial year, allowing your employer to take less tax out of your wages. It’s important to speak with your specialist quantity surveyor to organise a tax depreciation schedule before submitting a PAYG withholding variation as this information will be used to help accurately estimate your tax return. You will still need to visit your accountant at the end of the financial year so they can calculate the actual amount of tax liability. Claim missed deductions It is always advisable to stay on top of your finances by claiming deductions in the same applicable year, as delaying your claim will only add extra confusion and stress to your next tax return. However, if previous depreciation deductions weren’t claimed, the ATO allows you to recover missed payments from past financial years by adjusting your tax return. This is useful for investors who were previously unaware of depreciation deductions. Obtaining your tax depreciation schedule before June 30 is important if you want to maximise your returns and keep your finances on track. To find out how you can organise a depreciation schedule before 30 June contact the tax depreciation experts BMT on 1300 726 728 or Request a Quote. Article supplied by BMT Tax. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service. Also: Smoke Alarm Legislation changed Jan 1 2022
May 6, 2022
Smart homes: If these walls could talk
What is a smart-home? Not very long ago these words didn't have much meaning to us. Buildings used to be inanimate structures — but no longer. The advent of conversation-friendly buildings injects life into the membranes of homes (present and future). In terms of possible developments in technology, 5G will enable an era of connectivity like never before from autonomous driving, tactile internet, immersive technologies and next-generation IoT (internet of things) applications. The internet of things describes physical objects that are embedded with sensors, processing ability, software and other technologies that connect and exchange data with other devices and systems over the internet or other communications networks. This is also true of the built environment, which is increasingly helping its users to connect smartly, efficiently and more productively. Smart homes can warm the air temperature before you get home and remind you to get milk. The rise of conversation-friendly buildings As society transforms, powerful trends are reshaping businesses; driving new technologies, shifting our needs and changing human behaviour. Global think-tank FutureScope explores the complex journey from innovation to commercial success on a global scale. Even as far back as 2010, FutureScope reported that architects using sound-mapping software developed at Cardiff University in Wales could see the noisy hot spots where conversations in a room might become unintelligible. By altering room shapes and materials, they will be able to make meeting spaces, open-plan offices, and even cafes more compatible for conversations. The construction of smart buildings, technology-based structures that improve efficiency, helps to achieve objectives that benefit both the user and the environment. Sharing and integrating data between building systems enables the value of the combined smart homes to be greater than the sum of its parts. The reality On a broad scale, these smart-building aims have been realised at the National Grid in the UK (to improve the utilisation of buildings within the estate) and at the University of Technology Sydney (to synchronise air conditioning with a room-booking platform). Next-generation technology and artificial intelligence are also being utilised in our homes via pre-programmable applications and platforms (from self-locking and opening mechanisms to robotics-based domestic aids, including AI wardrobe choice assistance and grocery shopping reminders). When used smartly and wisely, advancing the breadth of technologies such as these frees up invaluable time and ultimately enhances our quality of life. Smart homes and smart buildings are now part of our society's landscape. One of the original smart home technologies - the smoke alarm - has recently changed had a legislation change.
Jan 17, 2022
Don't Ignore Smoke Alarm Changes in Qld - Jan 22
For dwellings being sold, leased or an existing lease renewed Existing landlord’s and tenant’s obligations continue from 1 January 2017. Property sellers must continue to lodge a Form 24 stating the requirements of the legislation have been met. See New Smoke Alarm Legislation for more details. From 1 January 2022 All homes or units being sold or leased, or existing leases renewed, will require hardwired photoelectric, interconnected smoke alarms. Non-removable 10-year battery smoke alarms can be installed in place. Smoke alarms in the dwelling must: be photoelectric (AS3786-2014); and not also contain an ionisation sensor; and Be hardwired to the mains power supply, if currently hardwired. Otherwise, smoke alarms can be either hardwired or powered by a non-removable 10 yr battery or a combination of both. be interconnected with every other smoke alarm in the dwelling so all activate together. The legislation requires smoke alarms must be installed in the following locations: on each storey in each bedroom if there is no hallway, between the bedroom and other parts of the storey; and if there are no bedrooms on a storey, at least one smoke alarm must be installed in the most likely path of travel to exit the dwelling. The obligations on property sellers are triggered by the date the initial sale contract is signed. When a contract of sale is signed after 1 January 2022 , the seller is obligated to upgrade the dwelling to the updated interconnected domestic smoke alarm standard prior to the dwelling being transferred. The property seller must declare on a “form 24” to the buyer as part of the transfer process that this obligation has been discharged. How it could cost you more than a $1000? Failure to comply with the new legislation means a property being sold allows the buyer to claim 0.15% of the purchase price prior to settlement. So on a property sale of $900,000, this would mean they are entitled to claim $1350. So make sure you have installed all the necessary smoke alarms well before settlement so this does not become an issue for you. For more information on what is required please check the Queensland Fire Service Fact Sheets - Click here